Are Marijuana Taxes Too High? They Already Beat Alcohol And Tobacco And They’re About To Get Worse
The price of legal cannabis in California is about to get higher—literally. Starting July 1, 2025, the state’s excise tax on cannabis is set to increase from 15% to 19%, a move that could push the total tax burden on consumers to nearly 48% when combined with local taxes. But how does this stack up against other taxed goods and is the cannabis industry being unfairly targeted?
The question of cannabis taxation has been hotly debated since California legalized adult-use sales in 2018. Supporters argue that cannabis should be taxed heavily, like tobacco and alcohol, to generate state revenue and discourage excessive consumption. Critics contend that the industry is already overburdened, making legal businesses uncompetitive against the illicit market.
A Heavy Tax Burden
According to data from the Legislative Analyst’s Office (LAO), cannabis is taxed more aggressively than many comparable products. A single pre-roll, for instance, carries a $1.24 state excise tax. By comparison, a glass of wine is taxed at just $0.01, a glass of beer $0.02 and a shot of liquor between $0.05 and $0.08. Even a cigarette is taxed at a lower rate of $0.14.
The gap widens further when factoring in state sales tax and local taxes, which can push total cannabis taxes as high as 38% (44% for deliveries). Once the new excise tax kicks in, the cumulative tax rate could reach 48%, effectively adding another $5 in taxes to a $100 purchase.