California Tax Officials: Legal Pot Would Bring $1.4 Billion

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.

– Article from The Associated Press.



  1. Anonymous on

    As of nov 24th the union does not care what the L.A. counicl plan? We have pass the word that as of Dec 2011 we as a movement are leaving L.A. County. We shall not buy houses gas, food or anything in this county as a movement. When theses cities and county goes BROKE!?! Then you will think again about what, and who you put in charge? To the people of L.A. County Thank you , but NO thank you, when you have no servises please do NOT blame us! We wantedto make this work, but your leaders who are bought off buy other copanies (booze and smokes) you all will now pay the price for having theses fools. goodbuy and enjoy being the poorest county in the state, ….FROM NOW ON, AND TILL THE END OF TIME.

  2. Anonymous on

    To say it stands to be an example across the globe is a hair short of a miracle. I digress, legalization in CA would still run chance of being invaded by the federal government should they decide to detract their earlier statement, which i suppose would spark the protest necessary to finally move people to get out and be a part of politics. But all in all i fear it just wont be passed, however this po-th-heed will be constantly blowing smoke in peoples’ face in hopes that one day all they can do is sit there grooving on it.

  3. Anonymous on

    As i do think that the comment is right about them legalizing it in the entire country or not at all, i do not agree with it being cheaper on the black market. $50 for an ounce is cheap. Yes there would be a tax but not enough to make it more expensive then an ounce is on the street. i think legalizing marijuana is an ingenious idea that will help with the finances of our country. can you imagine how much money will be saved first just on the cops that “take” the stuff and secondly all the money they will make selling it back to us. who cares if they do it just in California at first. at least its a start:) maybe the success of this there will help with legalizing it around the world.

  4. Harry Pothead on

    Heir Harper is a asshat with blinders on and no brain.

  5. Anonymous on

    I think it’s a naive idea. Think about it, if one state had legal marijuana while the rest of the country didn’t then that state would become the source. You’d have to build a fence around the state. Also, nobody would buy it from the stores because they would rather avoid the tax and they couldn’t price it lower than the black market prices in the rest of the country, in an attempt to encourage people to pay the tax, it would make the smuggling all the worse because it would be more profitable. They would have to legalize it in the whole country at once or not at all. If the national legalization did happen and it caused prices to drop then the US would become a source country for Canada, instead of the other way around. Then Harper would be griping some more about evil dope.