California’s Governor, Gavin Newsom, signed legislation on Monday aimed at reversing an impending tax hike on the state’s legal cannabis industry, striving to stimulate growth and secure its future viability.

The bill, AB 564, not only cancels a planned 25% tax escalation but also locks in the state’s cannabis excise tax at 15% through the year 2028, according to an announcement from the Governor’s Press Office.

“By rolling back this cannabis tax increase, we are enabling the legal market’s expansion, ensuring that consumers have access to safe products, and allowing local communities to benefit,” stated Newsom.

In addition to the tax break, Newsom’s administration has also taken measures to increase enforcement efforts against illegal operators.

From 2022, the Unified Cannabis Enforcement Taskforce (UCETF) has confiscated and destroyed over 317 tons, equating to more than 635,303 pounds, of illicit cannabis, reported the Governor’s Office.

Assemblymember Matt Haney (D–San Francisco), the author of AB 564, indicated that the licensed cannabis industry has faced significant downturns over the past five years, characterizing it as “dying” in a release on Monday.

He emphasized that the proposed 25% tax rise posed a risk of shutting down many smaller cannabis enterprises, potentially pushing consumers towards the illegal market.

“California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market,” Haney said.