What’s Changing
As of July 1, 2025, California’s cannabis excise tax jumps from 15% to 19%—the highest rate allowed under current law ([cannabisbusinesstimes.com][1], [calmatters.org][2]).
* This adjustment was mandated by legislation passed in 2022 when the state eliminated cultivation taxes, triggering a built-in excise increase tied to revenue declines ([sfgate.com][3]).
Why the Hike Happened
Tax revenues on cannabis have significantly fallen, down 30% since early 2021, reaching \$1.09 billion in Q1 2025—the lowest in five years ([calmatters.org][2]).
The state uses these excise funds for critical programs like childcare, environmental cleanup, substance abuse education, and impaired driving prevention ([calmatters.org][2]).
What It Means for Consumers
1. Higher Prices at the Shelf
Since the excise tax is added on top of the retail price, the average customer will pay approximately 4% more per purchase, equating to around \$5 extra on a \$120–140 bill ([calmatters.org][2], [cbsnews.com][4]).
2. Legal vs. Illicit Price Gap Widens
Consumers may begin to drift to the unlicensed market, where products are cheaper and untaxed. Illegal cannabis already comprises roughly 60% of all weed consumed in California ([dimovtax.com][5], [marijuanamoment.net][6]).
3. Small Operators May Disappear
Industry insiders warn that peaking taxes could mark the end for many small farms and boutique brands, making choice and quality shrink ([calmatters.org][2], [sfgate.com][7]).
Voices from the Industry
Genine Coleman (Emerald Triangle activist): “People are so concerned … it’s a dangerous space.” ([calmatters.org][2])
Amy O’Gorman Jenkins (Cannabis Operators Association): “You can’t squeeze blood from a stone.” ([sfgate.com][7])
Eli Melrod (Solful CEO): Warned of rising illegal sales due to price disparities ([sfchronicle.com.com][8]).
What’s Next?
AB 564, a legislative effort to freeze the excise rate back at 15% through June 2031, has passed the Assembly and awaits the Senate and the governor’s signature ([calmatters.digitaldemocracy.org][9]).
Governor Newsom has shown openness to signing it, keeping a door open if the Legislature moves swiftly.
What Consumers Can Do Now
Shop smart: Seek out dispensaries offering bundle or “happy hour” deals to offset the tax increase.
Stay legal: Legal products offer quality assurance, lab testing, and guaranteed safety.
Support reform: Back AB 564 or other efforts pushing for a tax freeze or rollback, especially if you want to protect the legal market’s future.
Stay informed: Monitor local delivery menus and pricing trends throughout July.
Conclusion
The new 19% excise tax marks a significant reset for consumers and the industry alike. Expect small hikes at checkout, increased incentives to shop off-market, and a critical vote in the Legislature that could freeze the rate. For now, staying educated and strategic is key.