If you’re wondering how much tax on weed in California you’ll actually pay, expect somewhere between about 23% and over 40% on top of the sticker price. That total comes from three stacked layers: a 15% state cannabis excise tax, state and local sales tax that together run from 7.25% to over 11%, and a local cannabis tax that varies wildly by city.
The 15% State Excise Tax
California charges a 15% excise tax on the gross receipts of every retail cannabis sale. Gross receipts means everything you pay at the register, including delivery fees and other charges rolled into the transaction. The retailer collects it and sends it to the California Department of Tax and Fee Administration.1California Department of Tax and Fee Administration. Cannabis Retailer Excise Tax Return
The rate briefly climbed. A scheduled increase took the excise tax to 19% on July 1, 2025.2California Department of Tax and Fee Administration. New Cannabis Excise Tax Rate Effective October 1, 2025 Governor Newsom signed AB 564 shortly after, and the rate dropped back to 15% on October 1, 2025.3Office of the Governor. Governor Newsom Signs Legislation Cutting Taxes on Cannabis, Promoting the Long-Term Success of the Legal Industry That 15% is locked in until at least July 1, 2028, when the next potential adjustment is scheduled.
State and Local Sales Tax
Cannabis is treated like any other taxable retail product for sales tax purposes. The statewide base rate is 7.25%. Once you add district taxes from cities, counties, and special taxing districts, the combined rate runs from 7.25% to over 11% depending on where you shop.4California Department of Tax and Fee Administration. California City and County Sales and Use Tax Rates
Here’s the wrinkle. Sales tax is calculated on a price that already includes the 15% excise tax. If a product costs $50 and the excise adds $7.50, sales tax applies to $57.50, not $50. The CDTFA confirms that “the cannabis excise tax is included in gross receipts subject to sales tax.”5California Department of Tax and Fee Administration. Tax Facts for Cannabis Businesses That compounding quietly pushes your bill above what you’d get by simply adding the percentages.
Medical Card Exemption
If you hold a valid Medical Marijuana Identification Card issued by the California Department of Public Health, medicinal cannabis purchases are exempt from state sales tax. You have to present the MMIC and a government-issued ID at the dispensary.6California Department of Tax and Fee Administration. Cannabis Retailers with Cannabis Businesses The exemption is codified in Revenue and Taxation Code Section 6369.6.7California Department of Tax and Fee Administration. Sales and Use Tax Law – Section 6369.6 The 15% excise tax still applies. Only sales tax is waived, but in a city with a 10% combined sales tax rate, the savings add up quickly. A doctor’s recommendation alone doesn’t qualify you; the exemption requires the state-issued card.
Local Cannabis Taxes by City
This is where the real variation hits. Cities and counties can levy their own cannabis-specific taxes on top of everything the state charges, and rates differ sharply from one jurisdiction to the next. Most are structured as a percentage of the retailer’s gross receipts.
A sampling of rates in major California cities:
- Los Angeles: 10% on adult-use retail sales, 5% on medical8Los Angeles Office of Finance. Cannabis Tax Rate Table
- San Diego: 8% on adult-use retail sales
- San Francisco: first $1 million in retail gross receipts exempt, 2.5% between $1 million and $1.5 million, 5% above $1.5 million9San Francisco Treasurer and Tax Collector. Cannabis Business Tax (CB)
- Oakland: tiered rates with a minimum effective rate of 2.5% for 202610City of Oakland. 2026 Cannabis Business Tax Renewal Notice
- Sacramento: 4% on gross receipts11City of Sacramento. Cannabis Business Tax
- Santa Barbara: 20% on gross receipts from cannabis sales
The spread between San Francisco’s small-dispensary structure and Santa Barbara’s flat 20% is huge, and it means two shops selling the same product at the same base price can hand you very different totals. Not every California city allows cannabis retail at all, and among those that do, the local rate is usually set by a voter-approved ballot measure.
A Real-World Example
Here’s how the layers stack on a $50 product bought in the City of Los Angeles, where the combined sales tax rate is roughly 9.5%:
- Retail price: $50.00
- State excise tax (15%): $7.50
- LA local cannabis tax (10%): $5.00
- Subtotal before sales tax: $62.50
- Sales tax (about 9.5% on $57.50, which includes the excise): $5.46
- Total out the door: about $67.96
That’s roughly $18 in taxes on a $50 product, an effective tax rate around 36%. In cities with lower or no local cannabis tax and the base 7.25% sales tax rate, the effective rate drops to about 23%. In Santa Barbara, with its 20% local tax, total taxes can push past 45% of the sticker price. The CDTFA publishes worked examples showing how the excise and sales tax interact, which you can use to verify the math for your own location.5California Department of Tax and Fee Administration. Tax Facts for Cannabis Businesses
The Hidden Federal Tax Baked Into Every Price
What shows up on your receipt isn’t the whole story. Because cannabis remains a Schedule I controlled substance under federal law, dispensaries face Internal Revenue Code Section 280E, which bars any business involved in a Schedule I or Schedule II substance from deducting normal operating expenses like rent, payroll, or utilities.12Office of the Law Revision Counsel. United States Code Title 26 – Section 280E
The only deduction cannabis businesses can take is cost of goods sold. Effective federal income tax rates for dispensaries can reach 70% or more, compared to the 21% to 30% range a typical retail business pays. Dispensaries build that into their shelf prices, so you’re indirectly paying for 280E every time you buy legal cannabis in California. Rescheduling has been discussed but no final rule has taken effect, and the IRS maintains that 280E applies until a rescheduling rule is officially published.