---
[ 420 FILE ](https://www.citywatchla.com/spotlight/the-420-file)
# Leaders and Industry Call for Urgent Reforms as AB 564 Seeks to Stabilize Cannabis Tax Rates
June 02 2025
Written by Jay Handal.
[](https://www.addtoany.com/share)
420 FILE - Assembly Bill 564 (AB 564), authored by Assemblymember Matt Haney (D-San Francisco), is making its way through the California Legislature in an effort to halt a scheduled increase in the state’s cannabis excise tax. Without intervention, the rate will rise from 15% to 19% on July 1, 2025—further straining the state’s legal cannabis industry already buckling under the weight of layered taxation and weak enforcement against illegal operators.
“If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California’s cannabis culture is under serious threat of extinction,” said Assemblymember Haney.
AB 564 seeks to repeal the automatic tax hike provision built into AB 195 (2022), which had eliminated the cultivation tax but required an eventual increase in the excise tax to offset lost revenue.
Advocates say this tax increase would be devastating.
“Los Angeles dispensaries are currently charging as much as **37.5%** in total taxes—including city, county, and state levies. Meanwhile, the illegal market continues to thrive with impunity paying no taxes and not testing any product for safety.,” said Jay Handal.
With California cities—including Los Angeles, Santa Monica, and Culver City—facing multi-million-dollar budget deficits, many in the industry argue that failing to act now will only worsen fiscal and public safety challenges.
Industry leaders are calling on state and local governments to take these immediate steps:
1. **Lower local tax rates** to 5% for recreational cannabis and **0% for medical**.
2. **Eliminate** the proposed 4% excise tax increase
3. **Reduce** the excise tax from 15% to a reasonable rate.
4. **Enforce illegal shop shutdowns** to protect licensed operators and public safety.
5. **Implement a tax amnesty** program allowing legal shops to repay back taxes over 60 months without crushing penalties.
6. **Reduce annual permit fees** that create barriers for small businesses.
“Legal shops can’t survive with 30–50% tax penalties while competing against illegal shops that pay nothing and operate openly,” added Jay Handal
**The message to lawmakers is clear:** Fix this system now—or watch the legal market collapse under a burden it was never designed to carry.
Jay Handal is the co-chair of the Neighborhood Council Budget Advocates, treasurer of the West LA Sawtelle Neighbored Council and is a long-time community activist who writes for CityWatch.
[](https://www.google.com/maps/d/u/0/viewer?mid=1aJKR8O-8BWOb9uR7p_2UmapNTL6n154B&ll=34.08274658817956%2C-118.34514801441333&z=11) [](https://podbay.fm/podcast/716402907/e/1380917940)
[  ](https://www.citywatchla.com/component/banners/click/107 "LA DWP | Save $4K, Green | Priority Ad")
[  ](https://www.citywatchla.com/component/banners/click/98 "Donna Tryfman - HS1-1")
[  ](https://www.citywatchla.com/component/banners/click/82 "LA DWP #2 (Power Savers)")
[  ](https://www.citywatchla.com/component/banners/click/111 "David DeJute Campaign")
[  ](https://www.citywatchla.com/component/banners/click/97 "Home - LA DWP #2 (Pay Water Bill Help)")
[  ](https://www.citywatchla.com/component/banners/click/112 "Anna Reitano Vertical R. Col")
## Get The News In Your Email Inbox Mondays & Thursdays
Name
[  ](https://www.citywatchla.com/component/banners/click/113 "Rhonda Haymon campaign")
---
## Featured CityWatch Stories
[  ](https://www.citywatchla.com/housing/33413-with-national-implications-corporate-landlords-take-aim-at-three-pro-rent-control-campaigns-in-california)
### [With National Implications, Corporate Landlords Take Aim at Three Pro-Rent Control Campaigns in California](https://www.citywatchla.com/housing/33413-with-national-implications-corporate-landlords-take-aim-at-three-pro-rent-control-campaigns-in-california)
HOUSING IS A HUMAN RIGHT - Corporate landlords and their high-powered lobbying group, the California Apartment Associat…
[  ](https://www.citywatchla.com/los-angeles/33386-massacre-on-city-streets-mayor-bass-must-issue-an-emergency-declaration-now)
### [Massacre on City Streets: Mayor Bass Must Issue an Emergency Declaration Now](https://www.citywatchla.com/los-angeles/33386-massacre-on-city-streets-mayor-bass-must-issue-an-emergency-declaration-now)
NICK'S VIEW - I have previously written about Los Angeles’s grim paradox: a city that promises safer streets while bein…
[  ](https://www.citywatchla.com/la-watchdog/33395-should-dwp-ratepayers-pay-for-the-citys-streetlights)
### [Should DWP Ratepayers Pay for the City’s Streetlights? ](https://www.citywatchla.com/la-watchdog/33395-should-dwp-ratepayers-pay-for-the-citys-streetlights)
LA WATCHDOG - In June, 80% of Los Angeles voters rejected the Bureau of Street Lighting’s ballot measure to increase th…
[  ](https://www.citywatchla.com/neighborhood-politics/33398-why-are-la-officials-ignoring-illegal-rv-parking-on-washington-blvd)
### [Why Are LA Officials Ignoring Illegal RV Parking on Washington Blvd?](https://www.citywatchla.com/neighborhood-politics/33398-why-are-la-officials-ignoring-illegal-rv-parking-on-washington-blvd)
WESTSIDE - Washington Blvd here in Venice is a main artery and corridor to the beach and pier. It is in fact a gateway…
[  ](https://www.citywatchla.com/guest-words/33419-they-tried-to-break-the-jewish-people-we-kept-building)
### [They Tried to Break the Jewish People. We Kept Building](https://www.citywatchla.com/guest-words/33419-they-tried-to-break-the-jewish-people-we-kept-building)
A STUDENT’S VIEW - My generation of Jews has learned something I wish we did not have to learn so young: antisemitism i…
---
## [ 420 FILE ](https://www.citywatchla.com/spotlight/the-420-file)
[  ](https://www.citywatchla.com/spotlight/the-420-file/33270-best-dispensaries-in-new-buffalo-in-2026-5-stores-you-should-visit)### [Best Dispensaries in New Buffalo in 2026 \[5 Stores You Should Visit\]](https://www.citywatchla.com/spotlight/the-420-file/33270-best-dispensaries-in-new-buffalo-in-2026-5-stores-you-should-visit)
[  ](https://www.citywatchla.com/spotlight/the-420-file/32869-acapulco-gold-feminized-seeds-complete-growing-guide)### [Acapulco Gold Feminized Seeds: Complete Growing Guide](https://www.citywatchla.com/spotlight/the-420-file/32869-acapulco-gold-feminized-seeds-complete-growing-guide)
[  ](https://www.citywatchla.com/spotlight/the-420-file/32813-how-legal-delivery-changed-the-way-cities-buy-cannabis)### [How Legal Delivery Changed the Way Cities Buy Cannabis](https://www.citywatchla.com/spotlight/the-420-file/32813-how-legal-delivery-changed-the-way-cities-buy-cannabis)
[  ](https://www.citywatchla.com/spotlight/the-420-file/32560-5-simple-thc-drink-recipes-youll-love)### [5 Simple THC Drink Recipes You’ll Love](https://www.citywatchla.com/spotlight/the-420-file/32560-5-simple-thc-drink-recipes-youll-love)
[  ](https://www.citywatchla.com/spotlight/the-420-file/32552-taxing-illegality-city-halls-dangerous-surrender-on-marijuana-enforcement)### [Taxing Illegality: City Hall’s Dangerous Surrender on Marijuana Enforcement](https://www.citywatchla.com/spotlight/the-420-file/32552-taxing-illegality-city-halls-dangerous-surrender-on-marijuana-enforcement)