The forestry industry also backed the law because it limits the legal damages companies have to pay if their practices started a wildfire.
The California Building Industry Association also supported the tax law, says CEO Mike Winn.
WINN: "Any increase in the cost of construction materials coming out of a recession is painful. CBIA took a good hard look at what the proposal was last year, and together with the forestry association, we felt like we were able to exempt enough of the lumber products."
Winn says the tax won't apply to some finished wood products used in building. He says the tax effectively raises the cost of building an average-sized new home in California about $80 to $125.
Winn says the tax will help increase lumber harvest capacity for California in the long run, which is good for foresters and homebuilders alike.