The affordability agenda promised by Sacramento Democrats hasn’t had measurable impacts on the intractable issues of electrical energy, gasoline, property insurance coverage or housing, that are all too costly. So lawmakers are actually specializing in one thing they will obtain.
A bipartisan juggernaut is rising to carry the road on hashish taxes.
The state’s authorized hashish trade, claiming that it faces its personal affordability disaster in opposition to the bigger illicit trade, is on a roll in Sacramento to reverse a rise within the excise tax that took impact this month. Whereas Democrats and Republicans alike appear to suppose it is a nice thought (one key invoice just lately handed out of the Meeting with 74 out of 80 potential votes), this new quest for hashish affordability appears to be forgetting one thing.
In 2016, Californians voted to legalize marijuana as a result of it was going to supply new tax revenues to underwrite youth applications, little one care, regulation enforcement and cannabis-related cleanups. Now the trade is bristling with the tax burden it as soon as gladly imposed on itself as the value for legalization. And the general public is left questioning whether or not the financial challenges of at this time’s authorized trade are actual and worrisome, or pure smoke.
Crocodile tears?
“This is an immense boondoggle for the cannabis industry that is coming at the cost of kids,” mentioned Lynn Silver, a public well being advocate and veteran of the state’s hashish conflicts. She estimates that Sacramento’s proposed tax aid will scale back hashish tax revenues statewide by greater than $1 billion over seven years.
“If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California’s cannabis culture is under serious threat of extinction,” mentioned Assemblymember Matt Haney, D-San Francisco, when he authored tax aid laws. “Instead, we should be looking at how we can support this industry which has barely been given a chance to survive after legalization.”
Prop. 64 imposed a 15% excise tax on authorized hashish merchandise in addition to a separate tax at cultivation. But revenues from this tax have been down almost 16% for the primary quarter of 2025 in comparison with a peak in 2023.
Why?
This a part of the California financial system is a fact-free zone as a result of the illicit market, believed to be larger, doesn’t precisely submit all its revenues just like the authorized one does to the California Division of Tax and Payment Administration.
Nonetheless, that hasn’t stored leaders of the authorized trade from complaining concerning the prices of doing enterprise in California. Between the 15% excise tax and additional native taxes on hashish and the gross sales tax and the laws of their bricks-and-mortar enterprises, California is killing the excitement.
The hashish excise tax elevated this month from 15% to 19% as a part of 2022 laws (with appreciable trade assist) to section out the tax on cultivation and exchange that income with the upper excise price. However that was when trade revenues have been heading up versus down.
Haney’s AB 564 would roll again this excise tax enhance for 5 years. Meeting Invoice 8 by Cecilia Aguiar-Curry, D-Winters, would set up the excise tax at 15% between 2028 and 2033.
“Let me be very clear that the legal cannabis industry is not stable,” mentioned Amy O’Gorman Jenkins, legislative advocate for the California Hashish Trade Affiliation, at a Could legislative listening to. “It is in a crisis.”
Silver, in the meantime, isn’t satisfied.
“Claims of its imminent collapse are greatly exaggerated,” she mentioned at a current press briefing. “While the cannabis industry is crying poverty, they are spending copiously to heavily lobby and influence our legislators to pass these bills, taking another page from the tobacco industry playbook and other industries.”
Prop. 64 opened door
Some taxes permitted in initiatives can solely be modified by the voters themselves. But Prop. 64 opened the door for Sacramento to endlessly tinker with the tax charges, giving two-thirds of lawmakers the power to earn a living adjustments as long as they “further its purposes and intent.”
But Prop. 64 had two very totally different functions, one to create a brand new trade and one other for its taxes to fill some gaps in authorities spending. And now these two functions are more and more in battle.
Silver, for instance, worries concerning the lack of maybe $900 million to assist childcare statewide for foster kids and low-income Californians and maybe one other $400 million in public security grants to native governments. An estimated 275 totally different organizations statewide assist forestall youth substance abuse, their funding in jeopardy as effectively.
All this public good was constructed on a authorized hashish trade being keen and capable of disproportionately tax itself. Prop. 64 is on a trajectory to being a false promise for California as an trade begs for tax aid as lawmakers view their job as making hashish extra inexpensive.
Our financial system has some enormous affordability issues.
This isn’t one in every of them. Sacramento is poised to preoccupy itself with hashish regardless. This Legislature has no core competency to handle the hashish trade and will honor what voters, rightly or wrongly, permitted.
Tom Philp is a Sacramento Bee columnist. ©2025 The Sacramento Bee. Distributed by Tribune Content material Company.
