Background. In November 2016, California voters approved Proposition 64, which legalized the nonmedical use of cannabis. Proposition 64 created two excise taxes on cannabis: a retail excise tax and a cultivation tax. Chapter 56 of 2022 (AB 195, Committee on Budget) eliminated the cultivation tax on July 1, 2022.
Preliminary Total for Fourth Quarter of 2025: $145 Million. The administration currently estimates that retail excise tax revenue was $145 million in the fourth quarter of calendar year 2025 (October through December). Preliminary revenues tend to differ modestly from actual revenues for various reasons, such as delays in filing or payment.
Current LAO Estimate for 2025-26: $648 Million. We currently project cannabis tax revenues of $648 million in 2025-26. This is $36 million above the January Governor’s Budget forecast for 2025-26. As shown in the figure below, the resulting 2026-27 revenue allocations are somewhat higher than the administration’s January projections. Looking further ahead, our preliminary revenue projection for 2026-27 is $661 million, which is $63 million above the administration’s January forecast.
