Marijuana is, in all likelihood, the largest cash crop in the United States, at an estimated $35.8 billion a year. Corn, at $23.3 billion is second. Pot brings in more than grapes in California, more than cotton in Alabama, more than tobacco in the Carolinas. Nationally, marijuana earns more than corn and wheat combined.
A 2006 report by NORML, a pro-marijuana legalization organization, used U.S. Drug Enforcement Administration estimates to arrive at the $35.8 billion figure. The DEA, in its cannabis eradication program, estimated that there were 22 million pounds of marijuana in the U.S. that it had not eradicated. Using a conservative figure for the going price of marijuana -- roughly $100 an ounce - NORML obtained the estimate.
Of course, there is no official figure because, with the exception of the 14 states and the District of Columbia where it is permitted for prescribed medical use, marijuana is illegal.
That could change for at least one state this November 2. The Regulate, Control and Tax Cannabis Act of 2010, known as Proposition 19, is on the ballot in California.
If approved by the state electorate, the law would authorize local governments, if they choose, to regulate and tax the commercial cultivation of the plant. Commercial growth would remain illegal in those cities and counties that did not opt in. Nonetheless, the law would allow individuals 21 years and older to grow 25 square feet of marijuana plants, process and possess the substance, and transport and share up to an ounce.
Passage is no sure thing. Campaigns for and against Prop 19 have been neck-and-neck in the polls, with the legalization side showing a slight edge through the summer. But an announcement last week by the U.S. Department of Justice is likely to have an impact on the outcome this November 2, although how much of one remains to be seen.
U.S. Attorney General Eric Holder said the Department of Justice strongly opposes Prop 19 and intends to enforce the federal Controlled Substances Act in all states, including California.
Holder was responding to a letter from former DEA chiefs who oppose legalization and urged the government to take a stand.
"We will vigorously enforce the CSA against those individuals and organizations that possess, manufacture or distribute marijuana for recreational use, even if such activities are permitted under state law," Holder wrote.
Opponents of Prop 19 hailed the Attorney General's statement as the impetus they need to defeat the measure.
"It takes the smoke right out of their hookah," said Roger Salazar, a spokesman for the No On 19 campaign.
Salazar said the threat of action by the federal government against anyone involved in selling marijuana undermines proponents' promise of big tax revenues for the state following legalization, and that situation will drain support for Prop 19.
NORML issued a report on the California initiative in 2009, which claimed that the state could realize over $1.2 billion annually in tax revenues and reduced enforcement costs by legalizing marijuana.
According to NORML, a $50 per ounce excise tax - roughly a dollar per joint -- would yield between $770 and $900 million per year, and another $240 to $360 million would be gained in sales taxes. In addition, the state would save over $200 million in enforcement costs for arrests, prosecutions and prison.
Basing their estimates on the experience of the California wine industry, NORML says the marijuana industry, replete with Amsterdam-style coffee houses generating jobs and tourism, would bring in four times as much as retail sales. Industrial hemp could generate another $3.4 billion a year, the organization said.
While opponents say the Department of Justice's statement cripples such expectations, proponents say they're wrong.
Tom Angell, spokesperson for Yes On 19, said the Attorney General's position "very much helps us."
"Californians aren't going to let politicians from Washington tell them how to vote," Angell said. "Just the opposite. It will feed into the widespread antiestablishment mood out there."
Many members of California's law enforcement community oppose Prop 19 and are pleased with Holder's stance.
Los Angeles County Sheriff Lee Baca, accompanied by two former DEA chiefs and the district attorney, released Holder's letter at a news conference Friday.
"He is saying it is an unenforceable law and the federal government will not allow California to become a rogue state on this issue," Baca said. "You can't make a law in contradiction to federal law as a state. Therefore Proposition 19 is null and void and dead on arrival."
But there are also members of the law enforcement community in favor of Prop 19.
"As we saw with the repeal of alcohol prohibition, it takes action from the states to push the federal government to change its policies," Joseph McNamara, a retired San Jose chief of police, said in a release.
"Passing Proposition 19 in California will undoubtedly kick start a national conversation about changing our country's obviously failed marijuana prohibition policies. If the federal government wants to keep fighting the nation's failed 'war on marijuana' while we're in the midst of a sagging economic recovery and two wars it just proves that the establishment politicians' priorities are wrongly focused on maintaining the status quo," he said.
Former LAPD deputy chief Stephen Downing responded directly to Sheriff Baca.
"It's shocking to hear that Sheriff Lee Baca said that he will disregard the will of the voters if Proposition 19 passes," Downing said. "When I was policing the beat with LAPD, I enforced marijuana laws that I disagreed with, simply because it was my job to enforce the law. Sheriff Baca should focus on doing his job instead of spending his time chest beating at press conferences and undermining the will of the voters of California. He should be ashamed of himself. Police in California have no obligation to enforce federal law."
Salazar from No On 19 noted that almost all of California's newspapers came out against the measure even before the Attrorney General's statement.
The most recent poll, in early October by Reuters/Ipsos, showed those opposed gaining a lead for the first time, at 53 percent. The poll also preceded Holder's remarks. There are no results yet available from polls taken after the federal government's opposition was announced.
Proponents dismissed the latest poll as an anomaly.
"Through the summer, it's been 47 percent for and 42 percent against," said Allen St. Pierre, executive director of NORML. "The last California field poll, which we consider the gold standard, had us actually gaining two points. It's looking pretty strong."
"It's still pretty much neck-and-neck," Salazar said, prior to the Department of Justice announcement. "But that works in our favor, because it means that a lot of people are still undecided. When people are undecided or uncertain, they tend to vote No when they get in the booth."
Also prior to Holder's statement, Salazar said that the notion of big tax revenues pouring in because of legalization was mere speculation, because Prop 19 sets no tax rate and, since it allows jurisdictions to opt in or out, there is no way of knowing how much revenue would be generated.
"The way the proposition is written it is less than vague," Salazar said. "It proposes to regulate, control and tax cannabis, but in reality it does none of those things."
Salazar said that, judging how the state's cities and counties reacted to the medical marijuana law passed in 1996, there will be little control and not a lot of tax revenue.
There are 536 jurisdictions in California and the great majority of them, said Salazar, have never adopted laws to tax and regulate medical marijuana.
"I expect much the same thing will happen if Prop 19 is approved," Salazar said. "If a county or city takes no steps to regulate and tax marijuana, it will remain illegal to sell it in that jurisdiction. But marijuana will still be legal, to grow, to possess, to process, to store, to smoke, to transport and to share with friends everywhere in the state."
Salazar said it will create a "marijuana free-for-all" atmosphere with no regulation and, for most jurisdictions, no tax revenues.
Salazar said that, of the opposition coalition, many are against marijuana because they consider drug use morally objectionable. Others oppose it on health grounds. But No On 19 chooses to fight the proposal on its legal and economic merits, or lack thereof.
"If they had written the law correctly, if it provided for a statewide regulatory system, with uniform standards and uniform taxation, then we might be having a different conversation right now," Salazar said. "But the law is poorly written and will only cause headaches."
Proponents, however, say the measure will be adjusted and bolstered once it becomes law.
Democratic State Assemblyman Tom Ammiano has introduced legislation that would establish a uniform statewide regulatory system for marijuana under the California Department of Alcoholic Beverage Control. The bill would leave cities and counties the option to regulate marijuana sales themselves.
Ammiano has introduced legislation to deal with legalized commercial marijuana before, only to see it die in the state legislature. But he has pledged to introduce up-dated legislation to ensure that marijuana is taxed for the benefit of residents.
In anticipation of the passage of Prop 19, a number of California cities -- including San Jose, Oakland, Long beach, Richmond and Sacramento - have initiatives on the Nov. 2 ballot asking voters to decide on taxation rates for commercial marijuana.
"Prop 19 is rather amorphous," St. Pierre said. "We expect that, within the next election cycle, the state legislature will pass laws affirming legalization and better defining regulation and taxation."
St. Pierre noted that many California jurisdictions still prohibit the medical marijuana business and his group expects resistance even after Prop 19 is approved by voters.
"It will be contentious. It will be problematic, like any adult commerce," he said. "We hope the legislature will act quickly to clarify matters where necessary."
But how the state legislature will behave in light of the federal government's opposition is not known. Neither is it known how voters will react knowing Uncle Sam frowns on legalization.
By Joseph Picard
October 17, 2010
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