NOTE: This article is provided for informational purposes only and does not constitute tax or legal advice. Always consult with your legal and tax professional to learn more about your legal obligations and compliance with any applicable laws.
Beginning October 1, 2025, the California state cannabis excise tax is scheduled to decrease from 19% to 15% per Assembly Bill 564 passed in September 2025.
The latest information can be found on CDTFA's website here. Be sure to check this website frequently leading up to October 1st, 2025 for any potential changes to the excise tax decrease and your related responsibilities under the law.
Assembly Bill 564
Assembly Bill 564 was introduced in February 2025 in an attempt to repeal the cannabis Excise Tax increase introduced by AB 195. On September 22, 2025 Mayor Gavin Newsom signed AB 564 into law, officially repealing the excise tax increase that went into effect on July 1st, 2025. Read more about Assembly Bill 564 on California's Legislature Information Website.
What do I need to do?
Consult your legal and tax professional to understand your obligations under the excise tax decrease and ensure you are properly charging taxes.
Ensure your Excise Tax setup in Config Page > Taxes > Point of Sale Tax Setup is updated after close of business on September 30th, 2025 or before opening on October 1st, 2025.
Check both your Adult Use and Medical tax setup to ensure your excise tax entry has a Rate of 15%.
If your Rate is set to "Automated" you will need to:
Create a custom tax called "CA Excise Tax"
Edit the tax layer where Tax Label = "Excise Tax"
Replace "Excise Tax" with the new custom tax you created.
Confirm the Rate is set to 15% and not "Automated"
Save your changes
Confirm your tax rate with your legal or tax professional by using a draft sale in POS.
NOTE: You do not need to complete the sale in order to verify the tax calculation as it will be displayed in the bottom left of the cart in POS. Additionally, you can print a receipt for the draft sale to see how it would display to the customer by clicking the "Print Receipt" button at the bottom center of the cart in POS.
After your tax updates have been made, check any saved or draft sales that were previously created to ensure the updated tax calculation is reflected prior to completing the sale.
If you are using Post Tax pricing, you may want to review your Post Tax price to ensure it is accounting for the decrease in the excise tax.