Two Governors, One Industry in Crisis

Texas protects hemp while California pushes painful taxes. Executive leadership must act wisely.

Dueling Decisions in Cannabis Policy

The cannabis industry is facing pivotal decisions in two of America’s largest and most influential states. In Texas, Governor Greg Abbott stunned many by vetoing a bill that would have banned intoxicating hemp products—preserving access to Delta-8 and other THC-based compounds (KXAN News). In stark contrast, California Governor Gavin Newsom seems ready to approve a tax increase from 15% to 19% on cannabis retail sales despite warnings it could devastate compliant businesses. These decisions highlight how executive leadership can either stabilize or stifle the cannabis industry at a time when it needs thoughtful support more than ever.

Texas Surprises With a Pro-Business Veto

Governor Abbott’s veto of Texas House Bill 3948 surprised both advocates and opponents. The bill aimed to ban hemp-derived THC products, a booming market in the Lone Star State. Abbott rejected the ban, citing economic impacts and regulatory concerns. His decision allows for the continued sale of products like Delta-8 and Delta-9, which are often used both recreationally and therapeutically. This rare show of restraint from a conservative executive illustrates how economic pragmatism can override political pressure (Cannabis Business Times).

California’s Costly Misstep on Cannabis Taxes

In California, things are moving in the opposite, and dangerous, direction. The California Legislature’s budget includes a retail excise tax increase from 15% to 19%, a move widely condemned by the California state industry as counterproductive. This hike comes amid shrinking margins, high compliance costs, and a thriving illicit market that undercuts legal operators. According to Marijuana Moment, lawmakers failed to include provisions to delay the increase, leaving many vulnerable licensed businesses on the brink of collapse. Rather than offering relief, the state is squeezing its own regulated marketplace. It's the wrong move at the wrong time.

A Bipartisan Plea Newsom Shouldn’t Ignore

Despite the budget’s tax hike, the California Assembly unanimously approved AB 564 on June 2 in a 74-0 vote, sending a clear signal to the Governor: freeze the excise tax at 15% and stop further automatic increases. Introduced by Assemblymember Matt Haney (D-San Francisco), the bill reflects bipartisan agreement that over-taxation is suffocating the legal market (IVN). Newsom has the authority to take executive action or issue an emergency stay, preserving the fragile balance between enforcement, accessibility, and industry viability. But so far, he’s remained silent. That has to stop.

Why Executive Action Matters Now

Executive leadership isn’t just sybolic. Executive leadership is a powerful tool for regulatory direction. Abbott’s veto proved a governor can shape cannabis policy in real-time. Newsom now has the same chance to become a defender of California’s compliant cannabis industry, rather than a passive observer of its decline. An emergency order could delay the tax hike and show he’s listening... not just to lawmakers, but to business owners and consumers relying on a functioning legal market. Failure to act now sends the wrong message: that California is comfortable pricing its own cannabis economy out of existence.

Industry Impact & Pac Garden Solutions

At Pac Garden Assets, we understand the deep strain these regulatory swings place on operators, investors, and entrepreneurs. The need for stability, compliant infrastructure, and scalable assets has never been greater. We offer strategic support for navigating complex environments like California and Texas.

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🔹 Pac Garden Consulting – From licensing to growth strategy, we help businesses thrive despite legislative volatility.

Conclusion

Texas showed the power of executive resolve in the face of a legislature that was simply wrong; California must now show the power of executive leadership. Governor Newsom has the authority to stop the tax hike, and we believe he has the responsibility to protect California’s legal cannabis industry. The time to act is now, before more businesses go under and the illicit market wins.