Governor Gavin Newsom signed a bill late September to roll back excise taxes on recreational weed in an effort to give some relief to the legal cannabis industry.

An excise tax is a levy imposed by the state before sales tax is applied.

Assembly Bill 564 will temporarily revert the cannabis excise tax to 15% until 2028, suspending an increase to the 19% levied earlier this year.

The law is meant to help dispensaries that proponents say are operating under a slim margin due to being bogged down by overregulation.

For years, the cannabis industry has lobbied against the excise tax, arguing that it hurts an industry overshadowed by a thriving illicit drug market.

Legal sales make up about 40% of all weed consumption, according to the state Department of Cannabis Control.

Taxable cannabis sales have slowly declined since 2021 for more than $1.5 billion to $1.2 billion four years later, according to data from the state Department of Tax and Fee Administration.

We're rolling back this cannabis tax hike so the legal market can continue to grow.

Consumers can access safe products in our local communities, see the benefits, Newsom said in a statement.

And that reducing the tax will allow businesses to remain competitive and boost their long term growth.

Several nonprofits that receive grants for the tax oppose the bill, arguing that over it and services for low income children, substance abuse programs and environmental protections, and Humboldt County cannabis growers are funding.

Conservation groups said they were disappointed by the governor's decision.

All this bill does is reduce the resources we have to remedy the harms of the legal market, said Alicia Hammond, Executive Director of Friends of the Eagle River.

For CalMatters, I'm Nadia Lathan