Background. In November 2016, California voters approved Proposition 64, which legalized the nonmedical use of cannabis. Proposition 64 created two excise taxes on cannabis: a 15 percent retail excise tax and a cultivation tax. Chapter 56, Statutes of 2022 (AB 195, Committee on Budget) eliminated the cultivation tax on July 1, 2022. As required by this law, the administration raised the retail excise tax rate to 19 percent on July 1, 2025.
Preliminary Total for Second Quarter of 2026: $152 Million. For cannabis excise tax returns filed for the second quarter of 2026, the total amount of tax due is $152 million. Preliminary revenues tend to differ modestly from actual revenues for various reasons, such as delays in filing or payment.
Current LAO Estimate for 2025-26: $630 Million. We currently project cannabis tax revenues of $630 million in 2025-26 and $650 million in 2026-27. As shown in the figure below, these estimates are close to the revenues anticipated by the 2026-27 budget package, which used a forecast from the 2026 Governor’s May Revision.
