As California’s legal cannabis industry heads into the second half of 2025, store owners are facing a combination of rising costs that could further disadvantage them against the state’s still-thriving illicit market.

California’s legal cannabis industry, long weighed down by high taxes and regulation, is facing new threats: steep federal tariffs on key imports and a proposed statewide ban on disposable vapes.

A popular and game-changing rescheduling proposal backed by Donald J. Trump to reclassify cannabis from Schedule I to Schedule III under the federal Controlled Substances Act (CSA) remains formally active but administratively paused by a DEA judge.