SACRAMENTO, Calif. (FOX 5/KUSI) — Legal cannabis sales in California brought $283.7 million in tax revenue in the third quarter of 2025, the California Department of Tax and Fee Administration (CDTFA) announced Tuesday.

Cannabis excise tax revenue funds childcare programs, youth substance abuse prevention, environmental recovery, medical research and more, according to CDTFA. Officials shared that more than $7 billion in cannabis tax revenue has been raised since 2018.

During the third quarter, July to September, this tax rate temporarily increased 19%. However, the tax rate returned to 15% following legislation signed by Governor Gavin Newsom.

“We’re rolling back this cannabis tax hike so the legal market can continue to grow, consumers can access safe products, and our local communities see the benefits,” Newsom said in a news release.

Assembly Bill 564 stops a 25% tax increase on the cannabis industry, hoping to promote long-term success of the industry in California.

“California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market,” Assemblymember Matt Haney, bill author, said in a news release.

While balancing efforts to raise funds for California through these taxes and allow for economic growth, the state is also actively working to seize illegal sales of cannabis.

During quarter three of 2025, the California Cannabis Task Force seized $222 million worth of illegal cannabis sales. In these efforts, the state shared that they also saved 105 million gallons of water from these sites.

“These enforcement actions send a clear message: Illegal operations will not be tolerated,” Newsom said in a statement.

The legalization of the cannabis industry has raised raised $4.05 billion in excise tax and $3.06 billion in sales tax for California since 2018, CDTFA said.

“California remains committed to protecting consumers, public safety, and supporting our legal cannabis market,” Newsom added.

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