Gov. Gavin Newsom signs off the $308 billion state budget on Thursday evening. Which helps California’s struggling cannabis industry long-sought tax relief.

Some fireworks this weekend are happening for the California's cannabis growers and cultivators. They will no long have to be responsible for paying the cultivation tax to manufacturers or distributors when cultivators sell or transfer cannabis to another licensee.

Any cultivation tax collected on harvested cannabis that enters the commercial market on or after July 1, 2022, must be returned to the cultivator that originally paid the cultivation tax or, if unable to be returned to the cultivator, must be paid to California Department of Tax and Fee Administration (CDTFA) as excess tax (see our Industry Topics under the Distributor, Cultivator, or Manufacturer tabs for more information).

Distributors and manufacturers are no longer required to collect the cultivation tax from cultivators.