California’s legal cannabis market generates $8.4 billion for Californians as state cracks down on illicit operators
In the second quarter of 2026 alone, cannabis retailers remitted $261.7 million in cannabis excise and sales tax revenue.
At the same time, California is investing in enforcement to protect consumers and licensed businesses from the illicit market.
Taking on the illicit market
In August, inspectors with the California Department of Tax and Fee Administration (CDTFA) took possession of approximately $13.3 million in illicit cannabis and tobacco products from a Los Angeles County warehouse that uncovered a large-scale unlicensed cannabis and untaxed tobacco operation.
The case began when the property owner discovered the products after a tenant abandoned the warehouse and stopped paying rent. After realizing illicit products were being stored on the property, the owner contacted state officials.
The seizure included:
- 280,072 illegally labeled cannabis packages
- 107,441 packages of cannabis edibles
- 84,463 THC vape pens
- 9,303 grams of cannabis flower
- Nearly $3 million in illicit tobacco products
CDTFA’s Inspections Bureau has more than 70 team members enforcing California’s tax and fee laws, including inspecting inventory, identifying illicit products and taking action against businesses operating outside the legal market.
“Taking illicit cannabis off the streets protects California’s law-abiding licensed businesses and is another step toward a fairer marketplace for those who follow the rules, pay their taxes, and invest in California,” said CDTFA Director Trista Gonzalez. “Removal and proper disposal of the illicit cannabis protects unwitting consumers while ensuring the product never makes it to the marketplace.”
Protecting California’s kids
California’s cannabis strategy also includes strong safeguards to keep cannabis and other intoxicating products away from children and young people.
Governor Newsom recently signed Assembly Bill 2249, authored by Assemblymember Jacqui Irwin (D-Thousand Oaks), strengthening California’s protections against cannabis packaging, labeling, advertising and marketing that appeal to children. The law provides clearer standards for regulators and licensed businesses and restricts imagery associated with children’s entertainment, including cartoons, candy and sweets.
The Administration has also moved to close loopholes involving intoxicating hemp products, including establishing stronger restrictions on THC-containing consumable hemp products and a minimum purchase age of 21. California has more recently taken action against kratom and 7-hydroxymitragynine (7-OH) products in response to growing concerns about their potential health risks.
California’s cannabis strategy is part of a broader approach to illicit markets that recognizes threats to public safety and public health can evolve.
The state has brought together state, local and federal partners through the Unified Cannabis Enforcement Task Force – which the Governor created in 2022 to disrupt illegal cannabis operations and protect communities and legitimate businesses.
California leads with regulation and enforcement
California remains a national leader in implementing a comprehensive approach to cannabis legalization that prioritizes public safety, consumer protection, environmental stewardship, and a well-regulated legal marketplace. California oversees one of the world’s largest regulated cannabis markets while working to ensure compliance and accountability across the industry.
At the same time, the state has led some of the nation’s most aggressive efforts to combat illicit cannabis activity through coordinated enforcement operations involving the California Department of Cannabis Control, the California Department of Fish and Wildlife, other state partners, and local law enforcement. These efforts have targeted illegal cultivation and manufacturing sites that threaten public safety, divert water resources, harm wildlife habitats, and undermine licensed businesses. By pairing strong enforcement with investments in prevention, public health, environmental restoration, and local community support, California continues to demonstrate that legalization and public safety go hand in hand.
California will continue strengthening its regulated cannabis market while holding bad actors accountable.
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