To: BOARD OF SUPERVISORS
From: Executive Office
Meeting Date: September 9, 2025
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Department Contact: |
Supervisor John Haschak |
Phone: |
707-463-4221 |
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Department Contact: |
Kelly Hansen |
Phone: |
707-463-4441 |
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Item Type: Consent Agenda |
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Time Allocated for Item: N/A |
Agenda Title:
title
Ratification of Letter of Support for Assembly Bill 564 (Haney) - Cannabis: Excise Tax: Rate Increase Repeal
(Sponsor: Supervisor Haschak)
End
Recommended Action/Motion:
recommendation
Ratify letter of support for Assembly Bill 564 (Haney) - cannabis: excise tax: rate increase repeal.
End
Previous Board/Board Committee Actions:
The Board of Supervisors regularly issues support letters that align with the 2025 Legislative Platform. These letters advocate for adequate and ongoing federal and state funding, timely distribution of resources, increased local authority, and flexibility in administering and providing services.
Summary of Request:
AB 654 would repeal the scheduled increase of California’s cannabis excise tax from 15% to 19% which took effect July 1, 2025, and freeze the excise tax rate at 15% through June 30, 2031.
According to the bill’s author, AB 654 supports the stability and viability of the legal cannabis market by reducing the financial burden on licensed operators, particularly small, equity and rural cultivators, struggling to remain competitive against the illicit market. According to state analysis only about 40% of cannabis consumed in California is purchased legally, with the remainder coming from unregulated sources that avoid taxes and compliance costs.
The excise tax increase, if allowed to remain in effect, is projected to reduce long term legal sales and tax revenue, further destabilizing the regulated market. By returning to the 15% tax rate, AB 564 aims to assist licensed cannabis businesses by improving legal market competitiveness by reducing the cost disparity between legal and illegal products and sustain long-term state and local cannabis tax revenues by preventing further legal market contraction.
While the bill may temporarily reduce funds earmarked for youth programs, environmental restoration and enforcement, these impacts are expected to be offset long-term by increased legal market participation and improved tax compliance.
AB 564 passed the Assembly with bipartisan support and is currently under consideration in the Senate.
Alternative Action/Motion:
Do not ratify letter and provide alternative direction.
Strategic Plan Priority Designation: A Thriving Economy
Supervisorial District: All
Vote Requirement: Majority
Supplemental Information Available Online At: Bill Text - AB-564 Cannabis: excise tax: rate increase repeal.
Fiscal Details:
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source of funding: No funding needed for requested action |
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current f/y cost: $0 |
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budget clarification: No funding needed for requested action |
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annual recurring cost: $0 |
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budgeted in current f/y (if no, please describe): No |
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revenue agreement: No |
AGREEMENT/RESOLUTION/ORDINANCE APPROVED BY COUNTY COUNSEL: N/A
CEO Liaison: Executive Office
CEO Review: Yes
CEO Comments:
FOR COB USE ONLY
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Executed By: Atlas Pearson, Senior Deputy Clerk |
Final Status: Approved |
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Date: September 9, 2025 |
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