california legislature—2025–26 regular session
ASSEMBLY BILL No. 564
Introduced by Assembly Member Haney
February 12, 2025
An act to amend Section 34011.2 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. legislative counsel’s digest
AB 564, as introduced, Haney. Cannabis: excise tax: rate increase repeal.
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.
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 56 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 2 years thereafter, requires the California Department of Tax and Fee Administration to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected
99 pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19% of the gross receipts of retail sale.
This bill would repeal the requirement that the department adjust the cannabis excise tax rate, as described above, thereby retaining the existing cannabis excise tax rate of 15% of the gross receipts of any retail sale by a cannabis retailer, as provided.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
line 1 SECTION 1. Section 34011.2 of the Revenue and Taxation line 2 Code is amended to read:
line 3 34011.2. (a) (1) Effective on and after January 1, 2023, a line 4 cannabis excise tax shall be imposed upon purchasers of cannabis line 5 or cannabis products sold in this state at 15 percent of the gross line 6 receipts of any retail sale by a cannabis retailer. line 7 (2) For the 2025–26 fiscal year and every two years thereafter, line 8 the department, in consultation with the Department of Finance, line 9 shall on or before May 1 of the fiscal year immediately preceding line 10 the applicable fiscal year, adjust the cannabis excise tax rate upon line 11 purchasers of cannabis or cannabis products imposed in paragraph line 12 (1) by the additional percentage of the gross receipts of any retail line 13 sale by a cannabis retailer that the department estimates will line 14 generate an amount of revenue equivalent to the amount that would line 15 have been collected in the previous fiscal year pursuant to the line 16 weight-based cultivation tax imposed under Section 34012 as it line 17 read on the date before the effective date of the act adding this line 18 section. In no case shall the cannabis excise tax exceed 19 percent line 19 of the gross receipts of retail sale. The department shall round the line 20 rate calculated under this subdivision to the nearest one-quarter of line 21 1 percent. The adjusted rate shall become operative the following line 22 July 1.
line 23 (3) On or before May 1, 2025, and each May 1 every two years line 24 thereafter, the department, in consultation with the Department of line 25 Finance, shall estimate the amount of revenue that would have line 26 been collected in the previous fiscal year pursuant to the line 27 weight-based cultivation tax imposed under Section 34012 as it line 28 read on the date before the effective date of the act adding this 99 AB 564 — 2 —
line 1 section. The department shall estimate this amount by projecting line 2 the revenue from weight-based cultivation taxes that would have line 3 been collected in the previous calendar year based on information line 4 available to the department, including, but not limited to, line 5 information in the track and trace system required pursuant to line 6 Chapter 6.5 (commencing with Section 26067) of Division 10 of line 7 the Business and Professions Code, or any implementing line 8 regulations, as a percentage of gross receipts from the retail sale line 9 of cannabis and cannabis products by cannabis retailers in the line 10 previous calendar year.
line 11 (b) A purchaser’s liability for the cannabis excise tax is not line 12 extinguished until the cannabis excise tax has been paid to this line 13 state, except that an invoice, receipt, or other document from a line 14 cannabis retailer given to the purchaser pursuant to this section is line 15 sufficient to relieve the purchaser from further liability for the tax line 16 to which the invoice, receipt, or other document refers. line 17 (c) A cannabis retailer shall be responsible for collecting the line 18 cannabis excise tax from the purchaser and remitting that tax to line 19 the department in accordance with this division. line 20 (d) The cannabis retailer shall provide each purchaser with an line 21 invoice, receipt, or other document that separately states the line 22 cannabis excise tax.
line 23 (e) The cannabis excise tax imposed by this section shall be in line 24 addition to the sales and use tax imposed by the state and local line 25 governments.
line 26 (f) Gross receipts from the sale of cannabis or cannabis products line 27 for purposes of assessing the sales and use taxes under Part 1 line 28 (commencing with Section 6001) shall include the tax levied line 29 pursuant to this section.
line 30 (g) Cannabis or cannabis products shall not be sold to a line 31 purchaser unless the cannabis excise tax imposed by this section line 32 has been paid by the purchaser at the time of sale. line 33 (h) This section shall not be construed to impose a cannabis line 34 excise tax upon medicinal cannabis, or medicinal cannabis product, line 35 donated for no consideration to a medicinal cannabis patient line 36 pursuant to Section 26071 of the Business and Professions Code. line 37 (i) (1) This section shall not be construed to impose a cannabis line 38 excise tax upon cannabis or cannabis products designated as a line 39 trade sample pursuant to Section 26153.1 of the Business and line 40 Professions Code.
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line 1 (2) A person licensed under Division 10 (commencing with line 2 Section 26000) of the Business and Professions Code that sells line 3 cannabis or cannabis products designated as a trade sample line 4 pursuant to Section 26153.1 of the Business and Professions Code line 5 shall be liable for the cannabis excise tax imposed by this section line 6 as if the person were a cannabis retailer at the time of sale. line 7 (j) This section shall become operative on January 1, 2023. line 8 SEC. 2. This act provides for a tax levy within the meaning of line 9 Article IV of the California Constitution and shall go into line 10 immediate effect.
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