California marijuana industry faces new tax increase, threatening legal market
July 7, 2025
BROADCAST TRANSCRIPT:
California’s legal marijuana industry is facing a new challenge as the state excise tax on cannabis increased from 15% to 19% on July 1, potentially driving customers away from licensed dispensaries.
Ronald Allen, co-owner of a licensed dispensary in Bakersfield, worries the tax hike could put small businesses like his at risk.
“It’s affecting everybody across the board, everybody from the buyers to the growers,” Allen said.
Individuals purchasing cannabis at legal dispensaries will now pay more for their products due to the 4% tax increase.
“We operate small, so it’s not like we have 5-6 stores like in some areas where they would depend on one store to carry the other one. We don’t have that benefit here, so yes, we can see that affecting that,” Allen said.
While marijuana sales remain illegal in most areas of Kern County, cities like Arvin, California City, and McFarland have legalized cannabis businesses.
The tax increase stems from Assembly Bill 195, enacted in 2022. The legislation eliminated the cultivation tax for cannabis growers but raised the excise tax to compensate for revenue losses from legal sales.
The additional tax revenue is intended to fund youth programs, including substance use prevention initiatives.
Diana Ross, Executive Director of Mid-City CAN and spokesperson for the Coalition to Protect Youth Programs, supports maintaining the funding.
“The data is clear positive youth development are good for kids, they help them develop, they help them stay on track at school and this money needs to continue to be dedicated as promised,” Ross said.
While the increase is already in effect, Assembly Bill 564, which aims to mitigate the tax spike, is currently under review by the California Revenue and Taxation Committee.
This story was reported on-air by a journalist and has been converted to this platform with the assistance of AI. Our editorial team verifies all reporting on all platforms for fairness and accuracy.
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