Sacramento, CA: 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 today, 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.
According to the BOE’s revised calculations, 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.
“With the state in the midst of an historic economic crisis, the move toward regulating and taxing marijuana is simply common sense,” AB 390 sponsor Tom Ammiano (D-San Francisco) said upon the bill’s introduction in February. “This legislation would generate 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. California has the opportunity to be the first state in the nation to enact a smart, responsible public policy for the control and regulation of marijuana.”
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.
In May, Republican Gov. Arnold Schwarzenegger acknowledged that “it’s time for a debate” regarding the legalization of marijuana for adults.
Commenting on the BOE’s latest analysis, California NORML Coordinator Dale Gieringer said, “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.”
A 2009 economic review by California NORML estimates that the eventual establishment of commercial cannabis-based businesses and related industries in California could ultimately raise some $12 to $18 billion in annual new tax revenue.
For more information, please contact Dale Gieringer, California NORML Coordinator, at: (415) 563-5858 or Allen St. Pierre, NORML Executive Director, at: (202) 483-5500. Additional information regarding AB 390 is available from NORML’s Take Action Center at: http://capwiz.com/norml2/issues/alert/?alertid=12758896.