Capitol Weekly: Cannabis tax increase will hurt consumers and public safety

Alex Freedman is President of the California Cannabis Operators Association, the largest cannabis industry association in the Golden State, representing hundreds of licensed operators throughout the supply chain (cacoa.org).

EXCERPT: In just a few weeks, California plans to increase its cannabis excise tax by 25%, from 15% to 19%. This policy decision, made in a previous budget cycle, was based on revenue projections that have since proven wildly optimistic.

Without legislative intervention, this tax hike will accelerate the collapse of California’s regulated cannabis market, harming consumers, public health, and ironically, the state’s bottom line.

Let’s be clear: This is not about tax relief for businesses. It’s about preventing a misguided policy that will drive even more Californians to dangerous, unregulated products while actually reducing state revenue.

Critics ask, “Why should cannabis get special treatment when everyone pays taxes?” This fundamentally misunderstands the unique position of the cannabis industry. Unlike every other legal product, cannabis competes directly with a thriving illicit market that pays no taxes whatsoever. At current rates, legal cannabis already shoulders a tax burden of 78% of wholesale value, compared to just 8.4% for alcohol and 29.5% for tobacco, according to the Department of Cannabis Control’s own analysis.

The consequences of this imbalance are already devastating. From Q2 2021 to Q4 2024, taxable sales were down by 34%, and taxes (excise + sales) were down by 31%. There are now more shuttered cannabis licenses (10,828) than active ones (8,514). The industry has shed nearly 18,000 jobs in two years. Most alarming of all, states like Michigan (with just one-fourth of our population!) now outsell California in legal cannabis.

This isn’t market correction; it’s market failure.

The impact on everyday Californians is profound. A cancer patient seeking relief from chemotherapy side effects, a veteran managing PTSD, or a senior with chronic pain already pays up to 38% in combined taxes on legal cannabis. Add a tax increase at the register, and more will inevitably turn to untested products from unlicensed shops or delivery services, where pesticides, heavy metals, and dangerous additives go undetected.

READ THE FULL OP-ED: Cannabis tax increase will hurt consumers and public safety | CAPITOL WEEKLY