On June 13, 2022, California’s Senate and Assembly passed a massive, $300 billion budget, just two days before the deadline which would have forced lawmakers to forgo their pay. While Governor Gavin Newsom has until June 30 to sign or veto it, and some issues surrounding the spending the state’s $49 billion surplus still have to be ironed out, what isn’t in dispute is that Newsom will be seeking a reduction of the state’s cultivation tax rate to zero.
The governor’s proposal would amend the recreational marijuana legalization ballot measure approved by California voters in 2016, which means eliminating the cultivation tax must be approved by a two-thirds majority of the state legislature. The new $0 cultivation tax would begin (most likely retroactively) as of July 1, 2022.
Newsom will also be seeking to shift the point of collection and remittance for excise taxes from the distributor to the retailer as of January 1, 2023.
California Senate Bill SB-1074, which also would have set cultivation taxes to zero, has been ordered to inactive status by the bill’s author, Senator McGuire. Since SB-1074 would also have increased the state’s excise tax over time to compensate for the lost cultivation taxes, it is possible that this burdensome addition to California’s stable of cannabis taxes will not be enacted.
 https://www.ebudget.ca.gov/2022-23/pdf/Revised/BudgetSummary/GeneralGovernmentandStatewideIssues.pdf, pg. 137