Newsom reduces cannabis tax in California to compete with illegal market

SAN FRANCISCO (KRON) — Governor Gavin Newsom signed a bill Monday reducing California’s cannabis tax from 19% to 15%, effective until 2028.

The tax reduction aims to support the legal cannabis market by making regulated products more competitive against illegal sources.

“It’s over regulated and over-taxed. Both of those things lead to higher prices for consumers,” said Erich Pearson, CEO of Sparc, which operates seven dispensaries in the Bay Area.

Zoe Schriber, Vice President of Policy for the California Cannabis Industry Association, noted that about 60 percent of cannabis consumers in California buy from illegal sources.

“Certainly it is a win,” said Amy O’Gorman-Jenkins, Executive Director of the California Cannabis Operators Association, who supports further tax reductions.

The tax increase on July 1 led to a noticeable impact on revenue for dispensaries like those operated by Pearson.

Pearson emphasized the importance of reducing costs for consumers, especially as people struggle with the broader economy.

The tax increase led buyers to seek cannabis products from illegal sources, according to industry experts.

Governor Newsom’s goal with the tax reduction is to help the legal market grow while ensuring customers have access to safe products.

O’Gorman-Jenkins highlighted the need for the legal industry to compete better by lowering prices, as cannabis remains the highest taxed, age-restricted product in the state.

With the tax decrease taking effect on October 1st, cannabis buyers in California can expect to see lower prices in stores, potentially boosting the legal market.

All facts in this report were gathered by journalists employed by KRON4. Artificial intelligence tools were used to reformat from a broadcast script into a news article for our website. This report was edited and fact-checked by KRON4 staff before being published.