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.
Preliminary Total for First Quarter of 2026: $144 Million. For cannabis excise tax returns filed for the first quarter of 2026, the total amount of tax due is $144 million. Preliminary revenues tend to differ modestly from actual revenues for various reasons, such as delays in filing or payment.
Current LAO Forecast for 2025-26: $633 Million. We currently project cannabis tax revenues of $633 million in 2025-26. This forecast is just $10 million above the administration’s May Revision forecast. As shown in the figure below, the resulting 2026-27 revenue allocations are close to the administration’s May projections. Looking further ahead, our preliminary revenue projection for 2026-27 is $642 million, which is $28 million above the May Revision forecast for that year.
