Criminal hashish gross sales in California, the rustic’s greatest marketplace, dipped to a five-year low after a since-repealed excise tax hike went into impact July 1, fresh state knowledge displays.
The predictable – and predicted – impact of greater taxes in an already lagging mature marketplace spells possible hassle for different states the place officers are elevating taxes akin to Michigan, the place lawmakers not too long ago licensed a brand new 24% wholesale tax.
California hashish outlets reported simply shy of $940 million in hashish gross sales within the 3rd quarter of 2025, consistent with California Division of Tax and Price Management knowledge.
That’s down from $993 billion in the second one quarter of 2025 and represents the bottom quarterly haul since early 2020, sooner than gross sales spiked all over the COVID-19 pandemic.
“The gross sales decline is unsurprising,” mentioned Hirsh Jain, a specialist and the major of Los Angeles-based Ananda Technique.
“California was once already probably the most easiest taxed states for felony hashish, which is why it has lengthy had the bottom per-capita gross sales of any mature grownup use state.”
California hashish tax hike harm felony gross sales – as predicted
Annual gross sales also are on tempo to dip for the 3rd consecutive 12 months – and to drop sooner than $4 billion for the primary time for the reason that marketplace’s release.
California felony marijuana gross sales in 2023 crowned $4.4 billion, in comparison to $4.2 billion in 2024.
As MJBizDaily reported, stressed out outlets predicted a gross sales drop would apply the tax hike.
Alternatively, it is still noticed if the gross sales dip is transient and whether or not gross sales will get better after the state lower taxes.
The state’s 15% excise tax greater to 19% on July 1 as a part of a tax construction imposed when the state eradicated its per-ounce cultivation tax partly in accordance with lawsuits from suffering cultivators.
The excise tax reverted again to fifteen% as of Oct. 1 after Gov. Gavin Newsom signed a invoice into legislation that may stay 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 lower marijuana taxes to assist out lagging markets?
New markets appear to acknowledge the issue posed by way of the tax burden in older markets like California, the place felony gross sales started Jan. 1, 2018, after electorate licensed legalization in November 2016.
For instance, the hashish excise tax in Ohio, the place gross sales started in August 2024, is best 10%.
Many operators are calling for a extra dramatic lower to California hashish taxes to opposite the yearslong development of shoppers drifting towards inexpensive illicit marketplace choices.
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Illicit, unregulated hashish intake in California continues to be greater than two times as large because the felony marketplace, consistent with a state-commissioned find out about revealed previous this 12 months.
Mentioned Jain: “Barring tax and regulatory reform, it kind of feels most probably that California will within the coming years be overtaken in gross sales by way of another state with a fragment of its inhabitants and can now not have the ability to declare that it’s the biggest hashish marketplace on the planet.”
