California: $1.38 Billion In Revenue By Taxing and Regulating Marijuana says Report

By chillinwill · Jul 16, 2009 · ·
  1. chillinwill
    The California State Board of Equalization released a legislative analysis today estimating that the state would collect up to $1.38 billion in new revenue from taxing and regulating the sale of marijuana.

    The report is based on Assemblymember Tom Ammiano’s (D-San Francisco) groundbreaking legislation, the Marijuana Control, Regulation, and Education act (AB 390) that would tax and regulate marijuana in a manner similar to alcohol.

    The bill would create a regulatory structure similar to that already in place for beer, wine and liquor, permitting taxed sales to adults while barring sales to or possession by those under 21.

    “We can no longer afford to keep our heads in the sand when it comes to marijuana. The move towards regulating and taxing marijuana is long overdue and simply common sense. The benefits of regulation are clear - controlling marijuana would generate up to $1.3 billion in much needed revenue for the state, restrict access to only those over 21, end the environmental damage to our public lands from illicit crops, and improve public safety by redirecting law enforcement efforts to more serious crimes”, said Ammiano.

    “It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available. California has an historic opportunity to be the first state in the nation to enact a smart, responsible public policy for the control and regulation of marijuana.”

    “The Board of Equalization has confirmed that marijuana already plays a huge role in the California economy, but unfortunately it’s underground and totally out of the state’s control,” said Stephen Gutwillig, California State Director of the Drug Policy Alliance.

    “Assemblymember Ammiano is right to propose harnessing that market and allowing the state to redirect scarce criminal justice resources to matters of greater public safety. It’s time to rethink our unenforceable pot laws and take the marijuana market back from the cartels and regulate it effectively.”

    “With the state issuing IOUs and getting ready to make massive cuts to schools and other vital services, it is simply unconscionable that California is literally turning away well over a billion dollars in revenue from marijuana consumers who want to pay taxes on their purchases. Not only could that money pay the salaries of 20,000 teachers, regulating marijuana would give us far better control over the most widely used illicit drug and take a big bite out of the profits of criminal gangs” said Bruce Mirken, director of communications for the Marijuana Policy Project.

    July 15, 2009
    San Francisco Sentinel

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  1. Baked.
    Calif. tax officials: Legal pot would bring $1.4B

    SAN FRANCISCO – A bill to tax and regulate marijuana in California like alcohol would generate nearly $1.4 billion in revenue for the cash-strapped state, according to an official analysis released Wednesday by tax officials.
    The State Board of Equalization report estimates marijuana retail sales would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes.
    The bill introduced by San Francisco Democratic Assemblyman Tom Ammiano in February would allow adults 21 and older to legally possess, grow and sell marijuana.
    Ammiano has promoted the bill as a way to help bridge the state's $26.3 billion budget shortfall.
    "It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available," Ammiano said in a statement.
    The way the bill is written, the state could not begin collecting taxes until the federal government legalizes marijuana. A spokesman says Ammiano plans to amend the bill to remove that provision.
    The legislation requires all revenue generated by the $50-per-ounce fee to be used for drug education and rehabilitation programs. The state's 9 percent sales tax would be applied to retail sales, while the fee would likely be charged at the wholesale level and built into the retail price.
    The Equalization Board used law enforcement and academic studies to calculate that about 16 million ounces — or 500 tons — of marijuana are consumed in California each year.
    Marijuana use would likely increase by about 30 percent once the law took effect because legalization would lead to falling prices, the board said.
    Estimates of marijuana use, cultivation and sales are notoriously difficult to come by because of the drug's status as a black-market substance. Calculations by marijuana advocates and law enforcement officials often differ widely.
    "That's one reason why we look at multiple reports from multiple sources — so that no one agenda is considered to be the deciding or determining data," said board spokeswoman Anita Gore.
    Advocates and opponents do agree that California is by far the country's top pot-producing state. Last year law enforcement agencies in California seized nearly 5.3 million plants.
    If passed, Ammiano's bill could increase the tension between the state and the U.S. government over marijuana, which is banned outright under federal law. The two sides have clashed often since state voters passed a ballot measure in 1996 legalizing marijuana for medical use.
    At the same time, some medical marijuana dispensary operators in the state have said they are less fearful of federal raids since U.S. Attorney General Eric Holder said the Justice Department would defer to state marijuana regulations.
    Advocates pounced on the analysis as ammunition for their claim that the ban on marijuana is obsolete.
    "We can't borrow or slash our way out of this deficit," said Stephen Gutwillig, California state director of the Drug Policy Alliance. "The legislature must consider innovative sources of new revenue, and marijuana should be at the top of that list."
    Ammiano's bill is still in committee. Hearings on the legislation are expected this fall.
    Also Wednesday, three Los Angeles City Council members proposed taxing medical marijuana to help close the city's budget gap.
    Council members Janice Hahn, Dennis Zine and Bill Rosendahl backed a motion asking city finance officials to explore taxing the drug.
    Hahn said that with more than 400 dispensaries operating in the city, the tax could generate significant revenue. The motion pointed out that a proposed tax increase on medical marijuana in Oakland, which has only four dispensaries, was projected to bring in more than $300,000 in 2010.
    Meanwhile, marijuana supporters have taken the first official step toward putting the legalization question directly to California voters.
    A trio of Northern California criminal defense attorneys on Wednesday submitted a pot legalization measure to the state attorney general's office, which must provide an official summary before supporters can begin gathering signatures.
    About 443,000 signatures are necessary to place The Tax, Regulate and Control Cannabis Act on the November 2010 ballot. The measure would repeal all state and local laws that criminalize marijuana.

    Just as SWIM expected.
  2. chillinwill
    Re: California: $1.38 Billion In Revenue By Taxing and Regulating Marijuana says Repo

    Assemblyman Tom Ammiano (D-San Francisco) has proposed a measure that would legalize and regulate marijuana sales in California. In light of state's economic woes, the proposal is attracting considerable interest -- particularly in the wake of a report released Wednesday that indicates a marijuana tax could increase state revenue by as much as $1.4 billion.
    The Drug Policy Alliance was one of the first groups to publicly support the report, saying that it “amplifies the escalating national discussion of marijuana policy.”

    Law enforcement groups were less ecstatic about the measure, however, fearing that decriminalization would lead to widespread marijuana use.

    L.A. Times readers have generally come out in support for marijuana decriminalization and regulation:

    "Seems like we are beginning to get a more practical picture about marijuana and its potential benefits for the state and it's residents. It's about time," said steveC.

    "This is inevitably going to happen, why delay it when everyone benefits. Increased tax revenue, prison population relief, as well as a reduction in revenue for organized crime groups are all positive benefits that taxed, legal marijuana can bring," wrote Louie.

    Student CSUFwas quick to point out the other ways marijuana legalization could help the economy, including an "increase in sales for Visine / Clear Eyes and late night snacks."

    A few readers did disagree with Ammiano's measure, however:

    "You can't balance the budget on the backs of drug addicts. It's unethical and immoral, not to say the poor message something like this sends to children and teens. Additionally, if anyone actually believes something like this will cut down on teen drug use, they must be dumber than they look or just don't know drug addiction very well. California cannot become the leader in drug use," said MICHAEL WHITE.

    What do you think? Is it time for California legalize and tax marijuana?

    Brendan Bigelow
    July 16, 2009
    LA Times
  3. chillinwill
    Re: California: $1.38 Billion In Revenue By Taxing and Regulating Marijuana says Repo

    California could take in nearly $1.4 billion a year in tax revenues from legal marijuana sales, the state Board of Equalization said in a report released Wednesday. The report was an analysis of the fiscal impact of a pending marijuana regulation, taxation, and legalization bill, AB 390, introduced in February by Assemblyman Tom Ammiano (D-San Francisco).

    The Board of Equalization estimates are slightly higher than a similar analysis by California NORML. That analysis estimated annual marijuana tax revenues at between $1.01 billion and $1.26 billion.

    The Board of Equalization estimates that a $50-an-ounce fee on marijuana sales would generate $990 million a year. The state would also take in an additional $392 million annually in sales tax revenues. The board did not supply an estimate of the costs associated with implementing the bill, but said it would incur "substantial administrative costs." It also noted that there could be a decline in alcohol and tobacco tax revenues if a substitution effect occurred. In other words, some smokers and tipplers might switch to pot if it were legal.

    Based on a review of the literature, the board estimated that annual marijuana consumption in California was one million pounds, or 16 million ounces. The board assumed that the legalization of marijuana would cause a 50% retail price drop, which would increase consumption by 40%, but that the imposition of the $50-an-ounce fee would cause that later figure to drop by 11%.

    The revenue estimate comes as California grapples with a huge fiscal crisis. The state is running a $26 billion budget deficit, state employees are being furloughed or laid off, and some vendors and recipients of cash payments from the state are now being paid with IOUs.

    As currently written, however, the Ammiano bill would not direct revenues into the state's general fund. Instead, they would be dedicated to drug prevention and rehabilitation programs.

    That bill could get a hearing this fall, an Ammiano spokesman told the Chronicle Thursday. "Right now, we are tentatively looking at a hearing date around the end of the year," said Quintin Mecke in Ammiano's San Francisco district office.

    "It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available," Ammiano said in a statement.

    That sentiment was echoed by California NORML's Dale Gieringer, author of the report mentioned above. "With the state in dire financial straits, it makes no sense for taxpayers to be paying to arrest, prosecute and imprison marijuana offenders, when they could be reaping revenues from a legally regulated market," he said.

    The report is also contributing to the ever-increasing buzz about marijuana legalization in California. Last week, the Marijuana Policy Project unveiled a TV spot touting the Ammiano bill. The ad, and its rejection by a handful of TV stations in major California markets, drew renewed national media attention to the issue, and this week, the Board of Equalization report is drawing media like flies to honey.

    "The release of the estimate has certainly caused a new round of attention to the issue," said MPP communications director Bruce Mirken. "The TV business channels have been especially interested. I was just interviewed by CNBC's Power Lunch, and Fox Business News is also very interested, as well as other media. The interest is certainly continuing," he said.

    The report only adds to the growing momentum for marijuana legalization in the state, said Mirken. "It definitely bolsters the case that this is a significant pot of money sitting out there that the state is turning away right now."

    The state government isn't the only California entity to express interest in marijuana tax revenues this week. Also on Wednesday, Los Angeles City Council members Janice Hahn, Dennis Zine, and Bill Rosendahl introduced a motion asking city finance officials to look into taxing medical marijuana sales in a bid to close the city's budget gap.

    Los Angeles is home to hundreds of dispensaries -- estimates range from 400 to 700 -- doing a thriving business. Hahn argued that taxing the dispensaries could generate significant revenues. The motion itself alluded to a proposed tax increase on medical marijuana dispensaries in Oakland -- proposed by the dispensaries themselves -- which is projected to bring in $300,000 for city coffers. Oakland has only four dispensaries.

    Also on Wednesday, supporters of a proposed 2010 ballot initative, the Tax, Regulate, and Control Cannabis Act submitted the measure to the attorney general's office. Spearheaded by Oaksterdam University's Richard Lee, the measure would repeal all state and local laws criminalizing marijuana.

    Under California law, the attorney general must provide a ballot summary before supporters can begin gathering signatures. That is only a first step in getting the measure to voters next year. Organizers would then have to gather 443,000 valid signatures to get the measure on the ballot.

    It is unclear at this point whether the ballot initiative organizers are planning a serious effort to make the 2010 ballot or if they are just laying down a place marker to keep their options open. In any case, it is increasingly clear that the pot is boiling over in California.

    from Drug War Chronicle
    Issue #594
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