Licensed California cannabis retailers reported $3.9 billion in cannabis sales in 2025, a significant drop from the $4.2 billion in 2024, according to state data released Thursday.
It’s also the third straight year of decline for the country’s largest market. California cannabis sales were $4.4 billion in 2023, according to the state Department of Tax and Fee Administration.
A since-repealed excise tax increase that went into effect on July 1 also may have contributed to the decline in sales in the nation’s largest legal cannabis market.
But sales during the fourth quarter – after the tax hike was repealed Oct. 1 – were still significantly lower than the same period a year ago, according to DTFA data.
California legal cannabis sales continue steady decline
Fourth-quarter cannabis sales were $979 million, nearly $46 million less than the $1 billion retailers reported during the same period a year ago.
California cannabis retailers report sales in two categories: cannabis only, and “taxable sales,” which includes goods like rolling papers, lighters and merchandise such as t-shirts.
The total taxable sales for 2025 was $4.8 billion, compared to $4.9 billion the year before and $5.2 billion in 2023.
Price compression is playing a limited role.
California’s marijuana unit sales declined to 208.7 million last year, down slightly from the 210.4 million units sold in 2024, according to cannabis data analytics provider Headset.
Meanwhile, flower prices in the state dipped by 1.9% to $28.34 per unit, according to Headset.
Illicit market, tax challenges for California cannabis continue
The country’s largest cannabis market continues to struggle with a longstanding illicit market. Seizures of illicit cannabis surged last year, suggesting ample domestic appetite for cannabis cheaper than what’s available on dispensary shelves.
California’s 15% excise tax increased to 19% on July 1 as part of a tax structure imposed when the state eliminated its per-ounce cultivation tax after struggling cultivators complained.
The tax reverted back to 15% after Gov. Gavin Newsom signed a bill into law that will keep the excise tax at that level until 2028.
Even with the three-month excise tax increase, cannabis retailers generated less tax revenue last year than they did in 2024. It dropped to $1. 05 billion in 2025, compared to $1.07 billion the previous year.
