California lawmakers can possible alter the state’s 2016 adult-use marijuana legalization regulation with out having to return to voters to approve each change, a state decide tentatively dominated Thursday.
The choice got here from San Francisco Superior Courtroom Decide Harold Kahn in a lawsuit introduced by youth advocacy organizations in search of to undo a hashish retail tax reduce handed by the Legislature and signed into regulation final fall by Gov. Gavin Newsom, in response to Courthouse Information.
California voters legalized adult-use hashish in 2016. Nonetheless the nation’s largest particular person market, California nonetheless has seen authorized gross sales steadily drop as operators complain of excessive taxes, onerous laws and a bustling illicit market that persists regardless of enforcement efforts.
The state’s licensed retailers reported below $4 billion in gross sales final 12 months, down from $4.2 billion in 2024. The general variety of items moved additionally declined, in response to state information.
Can California lawmakers legally reduce hashish taxes?
Retailers predicted such a dip when the state excise tax elevated from 15% to 19% on July 1, 2025 – an computerized enhance put in place in 2022 when lawmakers eradicated the state cultivation tax. The tax is now locked in at 15% till not less than 2028 below laws Newsom signed final fall.
That’s nonetheless too excessive for many hashish business observers and operators – however the tax reduce additionally means much less cash for packages promised hashish tax income. That features outfits like Youth Reworking Justice and the East Bay Asian Youth Middle, which sued the state Division of Hashish Management and different state officers in San Francisco Superior Courtroom in February, data present.
The teams additionally sued to dam a separate regulation, Senate Invoice 141, which devotes cash from the state Hashish Tax Fund to illicit-market enforcement efforts.
Each strikes are unlawful, the teams alleged. Of their lawsuit, they argued that the state Structure “prohibits the Legislature from amending voter-approved poll measures with out voter approval, except the poll measure permits that modification.”
They argued that decreased taxes “undermine the voters’ intent to make use of hashish excise tax income for social and environmental packages.”
“As a matter of California constitutional regulation, these amendments are due to this fact void.”
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What different adjustments to California hashish regulation can officers make?
In response to an objection from the state, Kahn agreed that such amendments to Prop. 64 are possible constitutional.
Nonetheless, as Courthouse Information reported, plaintiff’s lawyer Margaret Prinzing maintained that amendments to Prop. 64 are unlawful and requested extra time to make an argument that the tax reduce is unconstitutional.
Kahn agreed. A briefing date has not but been set, data present.
However there are indicators {that a} tax hike might also hurt outfits that depend on tax income.
Even with the three-month excise tax enhance, hashish retailers generated much less tax income final 12 months than they did in 2024. The state’s hashish tax haul dropped to $1.05 billion in 2025, in comparison with $1.07 billion the earlier 12 months.
