Cannabis: excise tax: rate increase suspension: report.
AB 564
California Bills
20250AB__056493CHP INTRODUCED 2025-02-12 AMENDED_ASSEMBLY 2025-05-07 AMENDED_SENATE 2025-07-10 AMENDED_SENATE 2025-09-02 AMENDED_SENATE 2025-09-05 PASSED_ASSEMBLY 2025-09-11 PASSED_SENATE 2025-09-10 ENROLLED 2025-09-15 CHAPTERED 2025-09-22 APPROVED 2025-09-22 FILED 2025-09-22 2025 AB CHP CHP 0 Introduced by Assembly Member Haney (Principal coauthor: Assembly Member Quirk-Silva) (Coauthor: Assembly Member Ransom) LEAD_AUTHOR ASSEMBLY Haney PRINCIPAL_COAUTHOR ASSEMBLY Quirk-Silva COAUTHOR ASSEMBLY Ransom
An act to amend
Section 34011.2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. taxation, to take effect immediately, tax levy Cannabis: excise tax: rate increase suspension: report. Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances.
The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities and establishes the Department of Cannabis Control (DCC) within the Business, Consumer Services, and Housing Agency to administer the act.
Existing law, the Cannabis Tax Law, imposes an excise tax upon purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer, and, as enacted by AUMA, imposed a cultivation tax on all harvested cannabis that entered the commercial market, as specified.
Chapter of the Statutes of 2022 (AB 195) amended AUMA to, among other things, discontinue the imposition of the cultivation tax on July 1, 2022. AB 195, beginning in the 2025–26 fiscal year and every years thereafter, requires the California Department of Tax and Fee Administration (CDTFA) to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19% of the gross receipts of retail sale.
Pursuant to that law, the department increased the cannabis excise tax rate to 19% for the 2025–26 fiscal year. This bill would revise the above-described provisions governing the cannabis excise tax rate. Specifically, the bill, for the period from July 1, 2025, to September 30, 2025, inclusive, would retain the existing cannabis excise tax rate of 19%. For the period from October 1, 2025, to June 30, 2028, inclusive, the bill would decrease the excise tax rate to 15%.
Beginning in the 2028–29 fiscal year and every years thereafter, the bill would require the department to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19%.
The bill would also require the DCC, in consultation with the CDTFA and the Legislative Analyst’s Office, on or before October 1, 2027, to submit a report to the Legislature that analyzes, among other things, the current and future effect of the Cannabis Tax Law on the regulated cannabis market and recommends options for changes to the Cannabis Tax Law to accomplish the intent of AUMA. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy. MAJORITY NO YES NO YES NO YES NO NO NO NO The people of the State of California do enact as follows:
SECTION
Section 34011.2 of the Revenue and Taxation Code is amended to read: 34011.2. (a)
(1) Effective on and after January 1, 2023, a cannabis excise tax shall be imposed upon purchasers of cannabis or cannabis products sold in this state at percent of the gross receipts of any retail sale by a cannabis retailer.
(2) Notwithstanding paragraph (1), on and after July 1, 2025, and before October 1, 2025, the cannabis excise tax rate imposed in paragraph (1) shall be percent of the gross receipts of any retail sale by a cannabis retailer as determined by the department, in consultation with the Department of Finance, pursuant to this section, as added by
Section of
Chapter of the Statutes of 2022.
(3) For the 2028–29 fiscal year and every two years thereafter, the department, in consultation with the Department of Finance, shall, on or before May of the fiscal year immediately preceding the applicable fiscal year, adjust the cannabis excise tax rate upon purchasers of cannabis or cannabis products imposed in paragraph (1) by the additional percentage of the gross receipts of any retail sale by a cannabis retailer that the department estimates will generate an amount of revenue equivalent to the amount that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under
Section as it read on June 29, 2022. In no case shall the cannabis excise tax exceed percent of the gross receipts of retail sale. The department shall round the rate calculated under this subdivision to the nearest one-quarter of percent. The adjusted rate shall become operative the following July 1.
(4) On or before May 1, 2028, and each May every two years thereafter, the department, in consultation with the Department of Finance, shall estimate the amount of revenue that would have been collected in the previous fiscal year pursuant to the weight-based cultivation tax imposed under
Section as it read on June 29, 2022. The department shall estimate this amount by projecting the revenue from weight-based cultivation taxes that would have been collected in the previous calendar year based on information available to the department, including, but not limited to, information in the track and trace system required pursuant to
Chapter 6.5 (commencing with
Section 26067) of Division of the Business and Professions Code, or any implementing regulations, as a percentage of gross receipts from the retail sale of cannabis and cannabis products by cannabis retailers in the previous calendar year. (
b) A purchaser’s liability for the cannabis excise tax is not extinguished until the cannabis excise tax has been paid to this state, except that an invoice, receipt, or other document from a cannabis retailer given to the purchaser pursuant to this
section is sufficient to relieve the purchaser from further liability for the tax to which the invoice, receipt, or other document refers. (
c) A cannabis retailer shall be responsible for collecting the cannabis excise tax from the purchaser and remitting that tax to the department in accordance with this division. (
d) The cannabis retailer shall provide each purchaser with an invoice, receipt, or other document that separately states the cannabis excise tax. (
e) The cannabis excise tax imposed by this
section shall be in addition to the sales and use tax imposed by the state and local governments. (
f) Gross receipts from the sale of cannabis or cannabis products for purposes of assessing the sales and use taxes under
Part 1 (commencing with
Section 6001) shall include the tax levied pursuant to this section. (
g) Cannabis or cannabis products shall not be sold to a purchaser unless the cannabis excise tax imposed by this
section has been paid by the purchaser at the time of sale. (
h) This
section shall not be construed to impose a cannabis excise tax upon medicinal cannabis, or medicinal cannabis product, donated for no consideration to a medicinal cannabis patient pursuant to
Section of the Business and Professions Code. (i)
(1) This
section shall not be construed to impose a cannabis excise tax upon cannabis or cannabis products designated as a trade sample pursuant to
Section 26153.1 of the Business and Professions Code.
(2) A person licensed under Division 10 (commencing with
Section 26000) of the Business and Professions Code that sells cannabis or cannabis products designated as a trade sample pursuant to
Section 26153.1 of the Business and Professions Code shall be liable for the cannabis excise tax imposed by this
section as if the person were a cannabis retailer at the time of sale.
SEC. 2. (
a) For purposes of complying with
Section of the Revenue and Taxation Code, as it pertains to the reduction of the cannabis excise tax rate allowed pursuant to
Section 34011.2 of the Revenue and Taxation Code as amended by this act, the Legislature finds and declares both of the following:
(1) The specific goal of the cannabis excise tax rate reduction is to provide immediate tax relief to the cannabis industry.
(2) The efficacy of this goal may be measured by the Legislature by the amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act. (
b) On or before June 1, 2027, and annually thereafter, the California Department of Tax and Fee Administration shall submit a report to the Legislature, in compliance with
Section of the Government Code, detailing the estimated amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act. (
c) This
section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3. (
a) On or before October 1, 2027, the Department of Cannabis Control, in consultation with the California Department of Tax and Fee Administration and the Legislative Analyst’s Office, shall submit a report to the Legislature, in compliance with
Section of the Government Code, that does all of the following:
(1) Analyzes the current and future effect of the Cannabis Tax Law (Part 14.5 (commencing with
Section 34010) of Division of the Revenue and Taxation Code) on the regulated cannabis market and its competitive position against the illicit cannabis market.
(2) Assesses the capacity for the Cannabis Tax Law (Part 14.5 (commencing with
Section 34010) of Division of the Revenue and Taxation Code) to generate revenue to restore the environment, fund youth treatment and prevention, and support community investment and law enforcement, consistent with
Section of the Control, Regulate and Tax Adult Use of Marijuana Act.
(3) Recommends options for changes to the Cannabis Tax Law (Part 14.5 (commencing with
Section 34010) of Division of the Revenue and Taxation Code) to accomplish the intent of the Control, Regulate and Tax Adult Use of Marijuana Act, including revenue effects, administrative feasibility, consistency with the purposes of the act, and impact on the regulated and illicit cannabis markets. (
b) The California Department of Tax and Fee Administration shall share information and data with the department to the extent necessary to complete the report required by subdivision (a). (
c) This
section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 4. This act provides for a tax levy within the meaning of