Authorized hashish gross sales in California, the nation’s greatest market, dipped to a five-year low after a since-repealed excise tax hike went into impact July 1, latest state knowledge exhibits.
The predictable – and predicted – impact of elevated taxes in an already lagging mature market spells potential bother for different states the place officers are elevating taxes akin to Michigan, the place lawmakers not too long ago accepted a brand new 24% wholesale tax.
California hashish retailers reported simply shy of $940 million in hashish gross sales within the third quarter of 2025, in line with California Division of Tax and Price Administration knowledge.
That’s down from $993 billion within the second quarter of 2025 and represents the bottom quarterly haul since early 2020, earlier than gross sales spiked throughout the COVID-19 pandemic.
“The gross sales decline is unsurprising,” stated Hirsh Jain, a guide and the principal of Los Angeles-based Ananda Technique.
“California was already one of many highest taxed states for authorized hashish, which is why it has lengthy had the bottom per-capita gross sales of any mature grownup use state.”
California hashish tax hike damage authorized gross sales – as predicted
Annual gross sales are additionally on tempo to dip for the third consecutive 12 months – and to drop earlier than $4 billion for the primary time for the reason that market’s launch.
California authorized marijuana gross sales in 2023 topped $4.4 billion, in comparison with $4.2 billion in 2024.
As MJBizDaily reported, harassed retailers predicted a gross sales drop would observe the tax hike.
Nonetheless, it stays to be seen if the gross sales dip is momentary and whether or not gross sales will get well after the state reduce taxes.
The state’s 15% excise tax elevated to 19% on July 1 as a part of a tax construction imposed when the state eradicated its per-ounce cultivation tax partially in response to complaints from struggling cultivators.
The excise tax reverted again to fifteen% as of Oct. 1 after Gov. Gavin Newsom signed a invoice into legislation that can hold the excise tax at that degree till a minimum of 2028.
When state gross sales taxes in addition to native hashish taxes are accounted for, the whole tax burden for California hashish continues to be over 30% in lots of jurisdictions.
Will lawmakers reduce marijuana taxes to assist out lagging markets?
New markets appear to acknowledge the issue posed by the tax burden in older markets like California, the place authorized gross sales started Jan. 1, 2018, after voters accepted legalization in November 2016.
For instance, the hashish excise tax in Ohio, the place gross sales started in August 2024, is simply 10%.
Many operators are calling for a extra dramatic reduce to California hashish taxes to reverse the yearslong development of customers drifting towards cheaper illicit market choices.
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Illicit, unregulated hashish consumption in California continues to be greater than twice as massive because the authorized market, in line with a state-commissioned research printed earlier this 12 months.
Stated Jain: “Barring tax and regulatory reform, it appears doubtless that California will within the coming years be overtaken in gross sales by another state with a fraction of its inhabitants and can not have the ability to declare that it’s the largest hashish market on this planet.”
