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 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.
Preliminary Total for Fourth Quarter of 2023: $157 Million. The administration currently estimates that retail excise tax revenue was $157 million in the fourth quarter of calendar year 2023. The revised estimate for the third quarter of 2023 is now $164 million, up 4 percent from the $157 million preliminary estimate announced in November.
Current LAO Forecast for 2023-24: $675 Million. We currently project cannabis tax revenues of $675 million in 2023-24. This forecast is $15 million above the January Governor’s Budget forecast. As shown in the figure below, the resulting 2024-25 revenue allocations are very similar to the administration’s January projections. Looking further ahead, our preliminary revenue projection for 2024-25 is $789 million, which is $95 million above the administration’s January forecast for 2024-25.
