Legalizing pot may drop the price of a marijuana cigarette to as little as $1.50 in California, but taxing weed may create a whole new black market, according to a new RAND Corp. study.
The six-month study by the renowned Santa Monica-based think tank provides fuel for both sides of the debate over whether California should legalize marijuana for recreational use.
The study didn't take a position on either the November ballot initiative -- Proposition 19 -- to legalize recreational marijuana use or proposed separate state legislation to impose a $50-per-ounce pot tax.
The study said legalizing marijuana in California would drop the price of pot by more than 80 percent and increase consumption.
It also said California could generate annual tax revenues either far higher or much lower than the $1.4 billion tax estimate by the state Board of Equalization last year.
It forecasts a possible surge of Amsterdam-style pot tourism or luring out-of-state drug traffickers wanting to buy cheap California weed to resell elsewhere.
Potential tax revenues may be lower if an illicit, secondary market develops from people trafficking cheaper, non-taxed marijuana.
Lead author Beau Kilmer, the other co-director of the RAND Drug Policy Research Center, said the cost of prime California pot -- currently valued at $300 to $450 per ounce -- could fall to as little as $38 an ounce if legalized in California. He said that could mean $1.50 a joint for high-quality marijuana.
The RAND report said researchers couldn't predict how much marijuana use would increase with legalization. But Kilmer said falling prices could drive up pot use by anywhere from 75 percent to 150 percent.
We believe consumption is going to increase, but it is unclear how much, Kilmer said. [Legalization] could change the stigma. There could be more promotion. There could be more advertising. ... There also will be a drop in the ... price that can influence behavior.
July 10, 2010
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