Drug Law

Regulating Marijuana Sales Would Rake in $1.4 Billion Annually

| by NORML

[Editor's note: This post is excerpted from today's NORML weekly media advisory.]

A revised budgetary analysis by the California State Board of Equalization (BOE) estimates that taxing and regulating the retail sale of cannabis by adults would raise approximately $1.4 billion in annual new state revenue.

The BOE’s estimate, released late yesterday, assesses a $50 per ounce tax on the retail sale of cannabis (among other state-imposed costs), as recommended under Assembly Bill 390: The Marijuana Control, Regulation and Education Act. This act seeks to license and tax the commercial production, packaging, and retail sale of marijuana to those 21 years of age or older.

As introduced, AB 390 would not impose taxation or licensing requirements on the non-commercial production of cannabis (up to ten mature plants), or on the not-for-profit distribution of pot. Further, the bill would not alter existing legislation on the use of medicinal cannabis, nor would it impose new taxes or sanctions on the medical cultivation of cannabis.

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According to the BOE’s revised calculations, the enactment of AB 390 would raise an estimate $990 million annually from the proposed $50 per ounce levy on retail sales of marijuana in addition to another $392 million in yearly sales tax revenues.

The BOE assessment did not assess whether the enactment of AB 390 would reduce existing law enforcement and prosecutorial costs, which have been estimated by California NORML to average some $200 million per year. In 2007, a record 74,000 Californians were charged with marijuana offenses – the largest total since the state ‘decriminalized’ the personal possession of small amounts of marijuana in 1976.

The BOE report acknowledged that legalizing pot for adults would likely result in a “substitution effect” where consumers gravitate toward the use of marijuana “and away from cigarettes and alcohol.”

According to a May 2009 California Field poll of 901 registered voters, 56 percent of Californians say that lawmakers should “legalize marijuana for recreational use and tax its proceeds.” Presently, the state is facing a $26 billion budget deficit.

Assembly Bill 390 is presently before the Assembly Committees on Public Safety and Health, which are expected to take up the issue early next year.