The cannabis industry in several key U.S. states, including California, Maryland, Maine, and Ohio, is bracing for significant tax increases, potentially exacerbating existing market challenges. With these states representing a substantial portion of the adult-use cannabis market, the proposed hikes could drive consumers to the illicit market or neighboring states, further straining the legal cannabis sector.
In California, the largest market likely to be affected, the cannabis excise tax is set to rise from 15% to 19% on July 1, according to Assembly Bill 564. Despite the looming increase, it remains uncertain whether legislative efforts to halt the hike will succeed. With excise tax collections falling in recent years, this increase threatens to further destabilize a market already grappling with a sizeable illicit industry. For more on how this affects California’s market, visit the CalMatters article.
Ohio is adopting an even stricter stance, doubling its excise tax from 10% to 20%, alongside other restrictive measures. This move is drawing criticism from the local cannabis community, which views it as a form of “re-criminalization.” The potential implications for the state’s industry are severe, as outlined in a recent Dayton Daily News report.
In Maryland, Governor Wes Moore proposes increasing the excise tax to 15% from 9%, effective July 2026, to address a budget shortfall projected to reach nearly $3 billion. This plan is part of the state’s biennial budget proposal, which can be explored further here.
Maine presents a more complex scenario, reducing the cultivation tax while increasing the cannabis retail sales tax from 10% to 14%. The net effect is an increased tax burden on dispensaries and their patrons, though it keeps Maine competitive with neighboring states, as reported by Maine’s Office of Cannabis Policy.
A survey by Whitney Economics highlighted that only 27% of U.S. cannabis businesses were profitable in 2024, a stark contrast to the national average of approximately 65% for small businesses, according to Forbes.
Operators in these states should prepare for these tax changes and consider strategies to mitigate their impact, potentially through internal cost reductions or price adjustments. For a comprehensive analysis of the situation and its implications, you can view the full article on Bloomberg Tax.