California revenue boosted by recent cannabis taxes

SACRAMENTO, Calif. California's legal cannabis industry generated $283.7 million in tax revenue during the third quarter of 2025, according to the California Department of Tax and Fee Administration (CDTFA).

The revenue from cannabis excise taxes is allocated to programs such as childcare, youth substance abuse prevention, environmental restoration, and medical research, CDTFA noted. Since 2018, the state has accumulated more than $7 billion in cannabis tax income.

From July through September, the cannabis excise tax temporarily rose to 19% but later returned to 15% after Governor Gavin Newsom signed legislation addressing the rate. Rolling back this cannabis tax increase allows the legal market to expand, provides consumers with safe products, and benefits local communities, Newsom said in a statement.

Assembly Bill 564 halts a planned 25% tax increase on cannabis, aiming to strengthen the industry's long-term prospects in California. Californias cannabis sector has great potential for the state, but success depends on giving the legal market a fair chance against untaxed and illegal operations, said Assemblymember Matt Haney, the bills author.

Alongside tax management, the state is actively targeting illegal cannabis sales. During Q3 2025, the California Cannabis Task Force seized $222 million worth of illicit cannabis and reportedly saved 105 million gallons of water from these operations. Governor Newsom emphasized, These enforcement efforts make it clear that illegal activities will not be tolerated.

Since legalization, California has collected $4.05 billion in excise taxes and $3.06 billion in sales taxes from the cannabis industry. The state remains committed to consumer safety, public protection, and fostering a thriving legal cannabis market, Newsom added.

Author: Sophia Brooks