Three significant and somewhat overlapping cannabis bills are currently moving their way through the California legislature. Read below for a comprehensive update.
Three bills, AB 564, AB 8, and SB 378 represent three distinct yet interrelated legislative approaches aimed at stabilizing and regulating California’s struggling cannabis and hemp industries.
- AB 564 seeks to provide immediate financial relief by delaying a scheduled excise cannabis excise tax hike, while
- AB 8 expands regulatory oversight to include industrial hemp products and reinforces tax enforcement.
- Moreover, SB 378 regulates the digital marketplace in a stated attempt to control the growing market of illicit online cannabis and hemp sales by imposing strict disclosure, reporting, and liability standards on digital marketplaces.
Together, these bills reflect California’s ongoing attempt to balance industry viability, consumer safety, and robust enforcement within a rapidly evolving cannabis landscape.
We analyze and provide further commentary on each bill below.
AB-564 Cannabis: excise tax: rate increase repeal. (2025-2026)
It is no longer a secret that the California cannabis industry is in extreme financial distress. Over the last 9 years, the legal industry has been overtaxed and overregulated while continuing to face insurmountable competition from a wholly unregulated illicit market.
Despite this depressing reality, on July 1, 2025 the industry is set to face another significant tax hike. Specifically, the cannabis excise tax rate will increase from the current 15% to 19% of gross receipts from retail sales of cannabis or cannabis products.
AB 564, a bill initially proposed by Assemblymember Matt Haney, is set to delay the tax increase and modify the current cannabis excise tax provisions established under California’s Adult Use of Marijuana Act (AUMA) and subsequent legislation (MAUCRSA).
Under existing law, purchasers of cannabis are subject to a 15% excise tax on retail sales, along with a cultivation tax that was previously imposed, until it was repealed on July 1, 2022, by AB 195.
AB 195 required that beginning in the 2025–26 fiscal year and every two years thereafter, the California Department of Tax and Fee Administration (CDTFA) adjust the excise tax rate to recoup revenue equivalent to what the cultivation tax would have generated, with a cap of 19%.
Bringing us to today, where AB 564 would delay (not repeal) this scheduled adjustment until at least the 2030–31 fiscal year, thereby preserving the current 15% excise tax rate in the interim. The bill also includes new reporting requirements: by December 1, 2026, and annually thereafter, the CDTFA must report to the Legislature on the impact of this delay on statewide excise tax revenues. The tax rate reduction will be evaluated based on changes in state revenue. If passed, the bill would take immediate effect as a tax levy and sunsets its reporting requirement on January 1, 2031.
Although the stated legislative goal of the delay is to provide immediate tax relief to the cannabis industry, which is being crippled by taxes, it remains to be seen whether this delay will be sufficient to keep legal operators in business. Frankly, without additional tax rebates or relief, this measure feels like too little, too late—but the industry is likely to take whatever support it can get.
AB-8: Cannabis: cannabinoids: industrial hemp. (2025-2026)
AB 8, as written and now amended, expands regulatory oversight of certain industrial hemp and cannabis products in California. This bill would require out-of-state hemp manufacturers selling food or beverages within the state (with 0% THC) to register with the CA State Department of Public Health (CDPH), aligning them with current in-state regulations established under AB 45.
More specifically, if this bill is passed, starting in 2028, the definition of THC products under MAUCRSA would be expanded to include industrial hemp concentrates. These proposed regulations would subject hemp products to regulations (which already apply to marijuana products), including tracking, quality control, and testing.
The bill prohibits the sale of inhalable cannabis products with hemp-derived or synthetic cannabinoids and authorizes multiple state agencies to inspect, seize, and destroy non-compliant products. Additionally, it restricts tobacco retailers from selling cannabis or THC products not approved under California law.
Similar to AB 564 above, AB8 would have cannabis tax implications by maintaining a 15% flat rate and would add additional taxes from hemp derived products at that same rate. However, beginning January 1, 2033, the tax rate reverts to the percentage in effect on December 31, 2027, and the biennial adjustment process resumes, using the same methodology and 19% cap.
By May 1 of each applicable year, the CDTFA must determine the equivalent revenue from the repealed cultivation tax, using track-and-trace and retail data to inform the rate adjustment for the following July 1. Notably, tax enforcement will also be ramped up significantly as the bill grants seizure powers to tax and law enforcement agencies when products appear to contain unauthorized cannabinoids, treating them as presumed cannabis.
Finally, AB 8 tightens restrictions on the use of the universal cannabis symbol by banning imitations and unauthorized modifications. Procedurally, this bill faces an uphill battle – since the bill results in increased taxation it must pass with a two-thirds majority vote in the Legislature.
If AB 8 does not pass, hemp business operators will continue to navigate their operations under the Sept. 2024 emergency regulations. If fully extended twice as legislatively allowed, these emergency regulations will eventually expire in September 2025, unless they go through the normal rulemaking process.
Additionally, if AB 8 does not pass hemp operators will continue to sell their wares under the current statewide sales and use tax rate of 7.25%, not the proposed 15%.
SB-378 Online marketplaces: illicit cannabis: reporting and liability. (2025-2026)
Finally, SB 378, as amended, aims to regulate online cannabis and hemp marketplaces by addressing the promotion and sale of unlicensed or noncompliant THC products. It requires these digital marketplaces to disclose, in their terms of service, whether they permit Californians to view listings from unlicensed cannabis sellers and whether they verify licenses. If license verification is not conducted, the site must display a prominent warning about the risks of unlicensed cannabis.
Furthermore, the bill mandates that online marketplaces provide users a clear way to report illegal cannabis activity, with follow-up communication and final determinations. Uniquely, the bill also allows various stakeholders, including the Attorney General and licensed cannabis sellers, to pursue civil enforcement and penalties for noncompliance.
In addition, this bill also addresses concerns about intoxicating hemp products. It defines such products, including inhalable hemp items with detectable THC levels, and mandates that online hemp marketplaces offer a reporting mechanism for these products. Just like the cannabis marketplaces, the hemp reporting system must provide written acknowledgments, status updates, and outcomes to users.
Finally, SB 378 restricts advertisements of illicit businesses and products. Specifically, the bill prohibits online marketplaces from running paid ads for unlicensed cannabis sellers or noncompliant hemp products. The bill imposes strict liability on these online platforms if such advertising substantially contributes to unlawful transactions that harm consumers. The bill outlines enhanced damages depending on the marketplace’s knowledge of the situation and the age of the harmed consumer, particularly increasing penalties if a child is affected.
It’s quite clear that SB 378 represents a significant tightening of oversight on digital cannabis and hemp marketplaces by trying to enforce transparency, and consumer warnings through civil accountability for enabling unlicensed or “unsafe” products. By imposing strict liability for illicit advertising and mandating clear user reporting systems, the bill has serious aims to safeguard public health while also trying to further empower regulators and compliant businesses. However, the recriminalization of these sales gives us pause, as the last thing the industry wants is to recriminalize actions associated with cannabis.
Looking Ahead to 2026.
Be sure to keep your eyes out for several other cannabis related bills this Legislative session:
- AB-1027: Cannabis: testing: quality assurance.(2025-2026)
- This bill enhances California’s cannabis testing and quality assurance under MAUCRSA by expanding retesting rules, mandating off-the-shelf product testing and consumer access to lab results, implementing blind proficiency tests, increasing DCC oversight and recordkeeping, updating embargo procedures, and reinforcing regulatory compliance to improve transparency and consumer safety.
- AB-686 Cannabis: appointees: prohibited activities.(2025-2026)
- This bill further extends existing prohibitions on financial conflicts of interest to include individuals appointed by the Governor to certain positions within the Department of Cannabis Control, barring them from profiting from cannabis license applicants or holders.
- AB-1496 Cannabis task force.(2025-2026)
- This bill reinstates and expands the previously repealed cannabis regulation task force to now include tribal government representatives, while continuing to exempt the task force’s meetings from the Bagley-Keene Open Meeting Act and the Ralph M Brown Act. Given this limitation on the right of access to the meetings/writings of public bodies this bill also includes the requirement of legislative findings to justify the limitation on public access.
- AB-1332 Medicinal cannabis: shipments.(2025-2026)
- This bill, effective until January 1, 2029, would allow licensed microbusinesses with M-licenses to ship medicinal cannabis directly to patients in remote areas under strict conditions, mandates compliance with retailer regulations, requires verification of physician recommendations, prohibits local bans on such shipments, and permits free medicinal cannabis deliveries, thereby expanding patient access and imposing new responsibilities on businesses and local jurisdictions.
Have Questions About California’s Hemp and Cannabis Bills?
At Manzuri Law, we don’t just follow the law—we help shape it. With over 20 years of experience in cannabis and hemp law, we’ve guided businesses through every legal shift, from pre-regulation advocacy to today’s complex compliance landscape. If the latest legislative updates have you unsure of your next move, our team is here to help you understand what’s changed and what it means for your business.
Contact Manzuri Law today for strategic, experienced legal counsel that keeps your cannabis or hemp venture ahead of the curve.