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California’s cannabis and hemp industries continue to evolve as lawmakers push forward new legislation in 2025. While the state’s legal market still struggles with high taxes and competition from the illicit market, several bills aim to bring relief, tighten oversight, and improve regulation.
Here’s a breakdown of the key cannabis and hemp bills to watch and what they could mean for your business.
The cannabis excise tax is currently 15%, but under existing law, it was scheduled to increase to 19% starting July 1, 2025. This increase was meant to make up for the loss of the cultivation tax, which was repealed in 2022.
AB 564 would delay this tax hike until at least the 2030–31 fiscal year. The bill would keep the excise tax rate at 15% for now, while requiring the California Department of Tax and Fee Administration (CDTFA) to report annually on how the delay affects state revenue.
The bill would take effect immediately if passed and sunset its reporting requirement in 2031. While it doesn’t solve all of the industry’s tax issues, the delay could offer some much-needed relief for legal cannabis operators trying to stay afloat.
AB 8 would expand California’s oversight of industrial hemp products, especially those that contain cannabinoids like THC. Under this bill, out-of-state hemp product makers selling food or drinks in California would need to register with the California Department of Public Health (CDPH), just like in-state businesses already do under AB 45.
Starting in 2028, the state would treat certain hemp products, such as concentrates and inhalable items, the same as cannabis products. These items would be subject to testing, tracking, labeling, and other quality control standards.
The bill also bans the sale of inhalable hemp products with synthetic or unapproved cannabinoids. Agencies like the CDPH and CDTFA would be allowed to seize and destroy non-compliant items. Tobacco shops would not be allowed to sell unapproved cannabis or THC products.
AB 8 also affects taxes. It would apply the same 15% excise tax to qualifying hemp products starting January 1, 2028. This rate would remain in place until 2033, after which the tax would again be adjusted every two years, capped at 19%.
If the bill fails to pass, hemp businesses will remain under the current rules, including the general sales tax rate of 7.25%, and emergency regulations that expire in late 2025.
SB 378 focuses on online marketplaces that list or promote cannabis and hemp products. It aims to stop the sale of illegal cannabis and THC items through websites and digital platforms.
If passed, the bill would require online marketplaces to be transparent about whether they verify cannabis licenses. If they don’t, the site must post a clear warning about the risks of buying from unlicensed sellers. These platforms must also give users a way to report illegal listings and share updates on how those reports are handled.
The bill gives the Attorney General, licensed businesses, and other stakeholders the power to sue platforms that break the rules. If a site runs paid ads for unlicensed cannabis sellers or banned hemp products, it could be held strictly liable, especially if the sales harm consumers or involve minors.
SB 378 also defines certain hemp items, such as inhalable products with any detectable THC, and applies similar reporting and enforcement rules to those listings.
For cannabis and hemp businesses, this bill could level the playing field online. It also raises the stakes for third-party marketplaces and advertisers who have operated in legal gray areas.
Several other bills could affect the legal cannabis and hemp industries this year:
Expands product testing rules, including surprise testing of retail products, and increases state oversight of cannabis labs.
Extends conflict-of-interest rules to state appointees who work with the Department of Cannabis Control.
Brings back the state cannabis task force and includes tribal government input, though meetings would not be open to the public.
Allows licensed microbusinesses to deliver medical cannabis directly to patients in remote areas, with safeguards in place.
The 2025 legislative session shows that California is trying to balance enforcement, consumer safety, and industry sustainability. Some bills, like AB 564, provide short-term help, while others, like AB 8 and SB 378, introduce new compliance requirements that could bring added costs and complexity.
If you operate a cannabis or hemp business in California, it’s important to track these bills closely and prepare for what’s coming. Understanding new tax rules, product restrictions, and digital marketplace standards can help you stay compliant and competitive in an ever-changing market.
At McElfresh Law, we stay on top of cannabis and hemp legislation so our clients don’t have to. If you need help understanding how these changes might impact your business, or if you’re not sure what steps to take next, reach out to our team.
Contact McElfresh Law today to schedule a consultation and get guidance tailored to your cannabis or hemp business.
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