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California’s Cannabis Excise Tax Will Increase by 27% on July 1, CDTFA Announces

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Legislation to repeal California’s cannabis excise tax increase likely won’t come in time.

The California Department of Tax and Fee Administration (CDTFA) announced May 1 that it’s required by law to increase the excise tax levied on cannabis retail sales from 15% to 19% starting on July 1, representing a 26.7% rate increase on an already overtaxed marketplace.

The law, orchestrated by Gov. Gavin Newsom in 2022, also requires the CDTFA to adjust the excise tax rate every two years moving forward unless the tax code is amended.

“We are aware of proposals to change our requirement to adjust the cannabis excise tax rate,” according to a CDTFA special notice released May 1. “If there are any changes that will affect the tax rate, you will receive another notification from us.”

Rep. Matt Haney, D-San Francisco, is sponsoring Assembly Bill 564, legislation that aims to cancel the excise tax increase on dispensary sales. The bill gained momentum when the California Assembly Business and Professions Committee voted, 15-0, on April 22 to advance it.

Haney’s bill would amend the state’s Revenue and Taxation Code and take effect immediately upon enactment, but time is running short before the July 1 excise tax increase is implemented.

The threat of the tax increase comes at a time when California’s illicit market continues to dwarf the state’s licensed market; however, the CDTFA’s hands are tied in the absence of a legislative fix for the industry.

“Cannabis retailers are responsible for collecting the cannabis excise tax from their customers who purchase cannabis or cannabis products based on the gross receipts from the retail sale,” according to the CDTFA. “Gross receipts generally include any amount the purchaser is required to pay to purchase the cannabis or cannabis products.”

The CDTFA provided an example of how the state’s local cannabis excise tax is calculated.

The specific example outlined below is based on a non-storefront retailer in Los Angeles that would be responsible for remitting a 10% local cannabis business tax, a 19% excise tax and a $9.75% state sales tax, which are stacked for the total amount due.

California Excise Tax CalculationCDTFA

This example highlights how a $35 purchase can quickly turn into a $60-plus transaction for a California cannabis consumer, who could be swayed to save the $25 upcharge on their next purchase should he or she choose an unregulated source.

Even omitting the service and delivery fees, the final total due in the example above would be $50.29, representing 43.7% in cumulative taxes from the original $35 selling price.

The forthcoming tax hike comes at a time when an estimated 63% of the 3.8 million pounds of cannabis consumed by Californians in 2024 came from unlicensed production, according to an ERA Economics report commissioned by the state’s Department of Cannabis Control.

So, why is the state jacking up the excise rate on a licensed cannabis industry that has yet to outpace its unlicensed counterparts?

“The rate change reflects an additional percentage equivalent to the amount of cultivation tax that would have been collected if the cultivation tax had not ended,” according to the CDTFA.

Specifically, when Newsom signed Assembly Bill 195 into law—legislation that was attached as a trailer to his 2022-2023 state budget—it eliminated California’s weight-based cultivation tax on July 1, 2022. In turn, it established trigger language to automatically increase the state’s excise tax (up to 19%) three years later if the industry’s tax revenues fell below a threshold promised to Tier 3 organizations that benefit from the tax revenue.

Despite the licensed industry providing the state roughly $7 billion in tax revenues since adult-use sales launched in 2018, cannabis stakeholders argue there will be no industry left to tax if the current market dynamics don’t change.



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Will Activision Blizzard Continue To Embrace Cannabis

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They are one of the most popular game studios – and a voice in the mainstreaming of cannabis. But now they are merging…

Activision Blizzard, a titan in the gaming industry, has consistently demonstrated its ability to tap into cultural trends and connect with diverse audiences. But today Microsoft won the final appeal in a deal to merge them into the company. The acquisition has the potential to reshape competition in the video game industry, particularly in the cloud gaming and mobile gaming sectors. About 25% of the world plays some form of online game, give it a huge cultural relevance.  But will Activision Blizzard continue to embrace cannabis?

RELATED: Science Says Medical Marijuana Improves Quality Of Life

One of the most notable examples is the company’s playful and creative embrace of cannabis culture within its flagship franchise, Call of Duty. Over the years, Activision Blizzard has released a variety of cannabis-themed cosmetic items, such as the “Cannabush” skin and the “Stoner’s Delight” bundles, allowing players to express themselves and add a touch of humor to their in-game experience.

Will Activision Blizzard Continue To Embrace Cannabis

This year, the collaboration reached new heights with the introduction of Seth Rogen-a well-known cannabis enthusiast-as a free operator in Call of Duty: Black Ops 6. His arrival brought a suite of themed rewards and coincided with the “Blaze of Glory” event, where players can collect special in-game currency and unlock cannabis-inspired items, further enhancing the sense of community and fun. These initiatives not only reflect the evolving attitudes toward cannabis in society, but also highlight Activision Blizzard’s commitment to keeping its content fresh, relevant, and engaging.

RELATED: Marijuana Use And Guy’s Member

The gaming industry’s openness to cannabis themes mirrors broader trends in the United States, where cannabis legalization and normalization continue to gain momentum. As federal and state laws evolve, brands like Activision Blizzard are well-positioned to connect with new audiences and foster inclusivity by acknowledging diverse lifestyles and interests. The integration of cannabis culture into mainstream gaming demonstrates a forward-thinking approach, making Activision Blizzard a leader in both entertainment and cultural relevance.

The good news is Microsoft has emerged as a significant player in the cannabis business community, particularly through its partnerships and technology solutions tailored to the unique needs of this fast-growing, highly regulated industry. The company was one of the first major tech companies to enter the cannabis space, partnering with KIND Financial to provide government agencies with “seed-to-sale” tracking software. This software, hosted on Microsoft’s Azure Government cloud, helps state and local governments monitor legal cannabis sales, ensure compliance, and manage regulation.

Additionally, Microsoft’s Dynamics 365 Business Central platform has been customized for the cannabis industry by companies like 365 Cannabis. This enterprise resource planning (ERP) solution is designed for cultivators, processors, distributors, and retailers, offering features such as production management, inventory tracking, quality control, and compliance reporting.

So it seems Microsoft will continue to embrace the mainstreaming of cannabis in their new part of the company.



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Pennsylvania Democrats ‘Ram’ Partisan Cannabis Legalization Bill Through House

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Pennsylvania House Democrats expedited an adult-use cannabis legalization bill through their chamber via a 102-101 vote on May 6 without attracting a single vote from across the aisle.

House Bill 1200, sponsored by Reps. Rick Krajewski, D-Philadelphia, and Dan Frankel, D-Allegheny, would allow adults 21 and older to possess up to 42.5 ounces of flower, 5 grams of concentrate or 500 milligrams of THC. They could also cultivate up to two mature and two immature plants at home with a $100 annual permit fee.

The legislation would also establish a regulated commercial marketplace in which the Pennsylvania Liquor Control Board would oversee state-run cannabis dispensaries, guinea-pigging such a model in the federally illegal confines of the U.S. The board would determine which municipalities could have the dispensaries, but they could not be located within 1,000 feet of a school or day care.

Meanwhile, the state would license private entrepreneurs to operate cultivation, processing, transportation and laboratory businesses.

After Krajewski and Frankel introduced H.B. 1200 on May 4, the House Health Committee that Frankel chairs advanced the legislation on May 5, and the full House passed the legislation on a second reading entirely along party lines on May 6. The lower chamber must vote on a third reading of the bill before officially sending it to the Senate.

A divided government, Pennsylvania Republicans control a 27-23 majority in the upper chamber, meaning partisan bills such a H.B. 1200 have low probabilities of gaining floor consideration in an opposing body, much less passing.

While there wasn’t floor debate on the underlying bill on Tuesday in the House, Rep. Charity Krupa, R-Fayette, said during the previous day’s committee hearing that she was appalled by how House Democrats “rammed” the legislation through.

“At this point, this vote isn’t just about marijuana; it’s about how we govern,” she said. “By scheduling a nonvoting session on a Sunday to introduce a sweeping 173-page bill and then racing it through committee and towards a floor vote with barely 48 hours’ notice, we are undermining the legislative process itself. … This scheme is a slap in the face.”

With their Sunday introduction, Krajewski and Frankel laid out five key priorities of the bill:

  • Automatically clearing criminal records and advancing restorative justice for those impacted by cannabis-related offenses;
  • Reinvesting tax revenue into communities disproportionately harmed by the war on drugs;
  • Implementing critical public health protections, including THC limits, marketing restrictions and child safety measures;
  • Creating pathways for diverse and local entrepreneurs to participate in the regulated cannabis market, with a priority on licensing and contracting; and
  • Maximizing state revenue and accountability with publicly owned and accountable retail stores.

More specifically, the legislation would cap cannabis flower at 25% total THC, concentrates at 200 milligrams of THC per package, and other products at 5 milligrams of THC per serving and 25 milligrams per package.

“We have listened carefully to public health experts, criminal justice reformers, small business advocates and community leaders,” Krajewski said. “Our bill reflects what we’ve learned—that we can and must legalize cannabis in a way that is safe, equitable and beneficial to all Pennsylvanians.”

The sponsors projected that a hybrid adult-use marketplace in the commonwealth would generate more than $500 million annually from taxes and state profits under the bill. In particular, the bill would impose a 12% excise tax on cannabis sales.

The legislation would establish a cannabis revenue fund, which, after paying for program costs, would designate 50% of the remaining money to a Communities Reimagined and Reinvestment fund, 10% to substance-use prevention and treatment, 5% to a cannabis business development fund, 2.5% to a minority business development fund and 2% to expungement processes. The remaining balance would go to the state’s general fund.

Karen O’Keefe, the director of state policies at advocacy organization Marijuana Policy Project, said there are pros and cons of the legislation.

“There are many provisions in this bill that we commend,” she said in a public statement. “It would stop criminalizing people for using cannabis and prevent families from being torn apart and lives being ruined because adults choose to relax with cannabis. However, we have serious concerns about the viability of a state-run stores model due to federal law. No other state operates cannabis businesses this way, and for good reason. State cannabis laws must be carefully crafted to ensure they are workable in the face of federal prohibition.”

Under current state law, possessing any amount of cannabis in Pennsylvania carries a misdemeanor penalty and the possibility of jail time, including up to 30 days with a $500 fine for 30 grams or less, and up to one year with a $5,000 fine for greater amounts. In 2023, Pennsylvania law enforcers arrested more than 11,000 people for cannabis possession, according to the National Incident-Based Reporting System.

Smoking cannabis in public would still carry a civil penalty under H.B. 1200, including a $100 fine on the first offense and up to a $200 fine on subsequent offenses.

The Liquor Control Board would be responsible for licensing 50 Category I cultivators for up to 125,000 square feet of canopy, 50 Category II micro-cultivators for up to 14,000 square feet of canopy, 50 Category I processors, 50 Category II micro-processors, up to 50 transporters, and additional permits for on-site consumption facilities and cannabis worker cooperatives.

Category I license applicants would be ranked and scored, with advantages awarded to certified social and economic equity applicants. Category II, transporter and consumption lounge applicants would enter lotteries designated for social equity and non-social equity applicants.

“By legalizing and regulating cannabis thoughtfully, we can avoid pitfalls that have marred rollouts in other states,” Frankel said. “Our plan will create clear rules that protect consumers, educate the public and ensure that Pennsylvania small businesses and taxpayers—not out-of-state corporations—benefit from the profits.”

While Pennsylvania Democratic Gov. Josh Shapiro has called for adult-use legalization in his last two budget addresses, he most recently proposed a 26% excise tax on sales, suggesting in February that the commonwealth is “losing out on revenue that’s going to other states instead of helping us right here.”

While the Krajewski-Frankel proposal remains partisan in the House, a bipartisan effort is unfolding in the Senate.

State Sens. Sharif Street, D-Philadelphia, and Dan Laughlin, R-Erie, introduced a bipartisan plan and circulated a sponsorship memo in February for their forthcoming adult-use legalization bill.

In Pennsylvania’s divided Legislature, Laughlin represents a pivotal peg in the legalization picture—a Republican champion for cannabis reform in the GOP-controlled chamber.



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Pennsylvania House Passes Cannabis Legalization Bill

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The Pennsylvania House of Representatives on Tuesday gave initial approval to an adult-use cannabis legalization proposal that includes state-run dispensaries, Marijuana Moment reports.

The proposal was just introduced on Sunday and advanced from the House Health Committee on Monday. House lawmakers then narrowly voted to pass the proposal on a 102-101 party-line vote, with all Democrats voting in favor of the bill and all Republicans voting in opposition. Lawmakers are expected to hold another vote on the proposal soon, and if approved again, the bill will move next to the Senate for consideration.

The bill would legalize cannabis possession for adults aged 21+ and create a regulated framework for the commercial cultivation and distribution of cannabis. Retail sales would be taxed at 12%, and all dispensaries would be operated by the state — however, the industry’s cultivators, processors, transporters, and potential consumption sites could be privately owned, the report said. Home grows would be allowed, but only with an annual $100 home cultivation permit issued by the state Liquor Control Board, which would be tasked with overseeing the industry. The bill also includes THC concentration caps for both cannabis edibles and flower products.

Health Committee member Rep. Charity Grimm Krupa (R) noted during Monday’s hearing that “it’s no secret that I stand in opposition to broadly legalized adult-use marijuana — but frankly, I’m appalled by the manner in which it’s being rammed through the committee and the legislature.”

The Committee Chair and co-sponsor of the bill, Rep. Dan Frankel (D), responded that “this has been a transparent process.”

“My door has been open to all those stakeholders on an ongoing basis for the past two years — the six hearings we had, and an opportunity for the minority party to have, to have a meeting to talk about this.” — Frankel, via Marijuana Moment

Pennsylvania Gov. Josh Shapiro supports legalizing cannabis, and nearly all of Pennsylvania’s neighboring states have already passed legalization policies.

Meanwhile, a report last year found the state could generate over $1 billion in cannabis tax revenue over five years of legal sales.

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