California Tax Board Says Regulating Commercial Pot Sales Would Yield $1.4 Billion Annually — Also Predicts Decline in Use of Booze and Tobacco
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July 16, 2009
[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.
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.
100 Responses to “California Tax Board Says Regulating Commercial Pot Sales Would Yield $1.4 Billion Annually — Also Predicts Decline in Use of Booze and Tobacco”
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go cali. go cali.
That’s right folks, marijuana legalization will bring down: alcohol, tobacco – which will cause a HUGE drop in health problems and it’s associated costs in our society, big pharma – who only seek to profit by hooking people on their legalized poisons, prison industry – which is solely dependent on the incarceration of non-violent recreational drug users, drug testing industry – which accounts for 90%+ of profits from marijuana testing – and open up the doors to new industries with the absolutely most useful plant on the planet, HEMP. Don’t get me started with hemp b/c it has over 250,000 useful applications ranging from textile, to paper, to biodiesel fuel – which will end our addiction to fossil fuels – AND it helps rejuvenate soil…. the list goes on and on and on – which mean LEGALIZATION of marijuana will ultimately save this planet.
Oh and let’s not forget – Real scientific research can be done on marijuana which has been shown to be an anti-tumor suppressor and among other amazing things… Truly, it is a GIFT from God.
Oh wow, who knew?
Oh that’s right, everybody.
Alcohol decline? Yes. Tobacco? Not nearly as much.
Well, well, well, throw a little (or a lot) of money into the equation and now people are listening. This isn’t exactly the road that most of us would like our legalization issue to take but whatever gets the job done. I personally would like to see legalization come from a personal liberties standpoint, but raising tax revenue seems to be the only way to “raise eyebrows” when it comes to any form of Government.
The evidence says it all. The war on drugs does not work and costs tax payers billions of dollars a year. I agree there will be people who will miss use or over use Pot but those people are the ones who are using illegally today and would miss use or over use illegally anyway. It is time for the government to wake up and stop prohibition on Pot and let the recreation/casual users purchase and use without the worry of spending years in jail.
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I like this bill. It would put the feds in the position of having to pursue every cannabis trifle to enforce their (federal) prohibition, for which they would be highly criticized for diverting resources from hard drugs and the Mexican border drug war area. California has potency standards for the cannabis consumers in place. Mexicans et al. should concentrate on sativa varieties that can’t be grown in the U.S.
The U.S. Attorney General, Holder, as head of the Justice department, should then in deference to California, as a matter of state’s rights, make the administrative decision to honor the will of the people of California by declaring the cannabis offenses to be the lowest priority, not even meriting a ticket.
If Congress is still unwilling to act, it stands to reason that other states will follow in California’s footsteps, and will legalize cannabis for medical and recreational purposes to get the revenue, too. The tax of $50 on an ounce is just under $2 a gram, and non-commercial and non-profit cannabis are not taxable. It would be a whole lot easier to compare prices to the rest of the world if they would stipulate the tax by gram, because anyone in the know realizes that in Amsterdam and elsewhere customers may purchase small quantities by the gram. $2 on top of whatever it costs to grow a gram of bud would pretty much be the price. Think about the math for a moment.
After other states legalize following California’s example, Congress will be in the perfect position to vote on legalization. They might as well. The longer they wait the less revenue to fix things.
Why can’t they take this on sooner? Oh yeah, giant budget deficit this might help.
But if they are talking about substitution effect, there is probably a concern over the loss of potential tax revenue from the reduction of the other sin taxes in place on tobacco and alcohol. I cannt find or tell if the 1.4 is an actualized number or not based on their assumptions here.
Is the 1.4 taking into account a decreased revenue stream from the other vice/sin taxes? It wont be as much as some people probably think it would be. The same restrictions from employers testing for cannabis and other social stigma will not have a huge increase in people “crossing over” anytime soon after passing something like this. Maybe once it was across the board in the US perhaps. But until then the large corporations are still going to test and punish for its use.
please lead the way to freedom.
California needs to implement a tax on medical marijuana establishments in order to avoid a tax loophole too.
~ Green Devil
Well no shit sherlocks. I cant believe there are still people shocked at the notion of profit from cannabis tax and sales. I been doin it off and on since 98. In fact ive come across lots of people who have made that house payment or bought that new water heater with civilian cannabis sales. Hell most of the nice electronics in my house are courtesy of a cheap QP from my mexican friend. Good people the world over have utilised sweet sister mary jane in times of hardship and if our government were either wise or good it would behoove them to do likewise.
yeah da do ya think. as an adult i think were going the right direction IT HAS NEVER KILLED NO ONE but cigarettes and ALCOHOL kill every day not to mention their ADDICTIVE AS HELL BUT YOU CAN GET THEM ON EVERY CORNER AT ANY TIME OF THE DAY!
Tax it! Regulate it! Create jobs and heavily bolster state revenue among the many other positive, ancillary effects!
Keep your hopes and heads held high for our country’s much needed changing, green climate.
This would be great!!! Here’s some food for thought. The present Medical Marijuana Bill in Congress started out with 13 co-sponsors on June 11th 2009—-by the end of June it climbed to 16 co-sponsors, Middle of July—> NOW!!! —> 24 co-sponsors!!! WOW!!!
Rep. Barney Frank [D-MA4]
Cosponsors [as of 2009-07-16]
Rep. Tammy Baldwin [D-WI2]
Rep. Earl Blumenauer [D-OR3]
Rep. Steve Cohen [D-TN9]
Rep. Peter DeFazio [D-OR4]
Rep. Keith Ellison [D-MN5]
Rep. Sam Farr [D-CA17]
Rep. Bob Filner [D-CA51]
Rep. Raul Grijalva [D-AZ7]
Rep. Maurice Hinchey [D-NY22]
Rep. Michael Honda [D-CA15]
Rep. Dennis Kucinich [D-OH10]
Rep. James McDermott [D-WA7]
Rep. James McGovern [D-MA3]
Rep. George Miller [D-CA7]
Rep. James Moran [D-VA8]
Rep. John Olver [D-MA1]
Rep. Ronald Paul [R-TX14]
Rep. Jared Polis [D-CO2]
Rep. Dana Rohrabacher [R-CA46]
Rep. Steven Rothman [D-NJ9]
Rep. Fortney Stark [D-CA13]
Rep. Michael Thompson [D-CA1]
Rep. Robert Wexler [D-FL19]
Rep. Lynn Woolsey [D-CA6]
Co-Sponsors from all over the Country!!!
From the West–Oregon,California,Washington,
From the East–Virginia,New Jersey,Massachusetts
From the North–Minnesota,Wisconsin,New York
From the South–Arizona,Texas,Florida
From Middle America–Ohio,Colorado,Tennessee
On story on this was in my local paper, in the deep south no less.
I wonder how much influence this tax board has over the legislature and governor. I wish we could wait untill after the 2010 elections to bring this to a vote. Force Gavin Newsom and Jerry Brown to take more progressive stances on pot legalization. Even if it passes the legislature meraculously Arnie will veto it plus doesn’t the legislature need a 2/3rds majority for tax bills or something. Could some cali user explain that in more detail.
a very good law… pass it… legalize it… a win, win situation for all americans!! go ammiano go arnold let’s get america moving again…
Why us it going to take so long before the California Legislature will have a hearing on the bill? (added by Mobile using Mippin)
I quit drinking alcohol last year, and stopped chewing tobacco this year (7 months no chew baby!!!)
Straight up, I could of quit alcohol on my own, but after numerous failures trying to quit chewing, I decided that everytime I had a true, uncontrolable urge to chew, I’d just smoke some pot instead.
Sure, for a short time period my marijuana intake increased, but within 2 months, I was over the hard to beat chewing urges, and I backed off on my pot intake back to what I normally would consume.
But if for some reason I had to quit smoking pot today, I would just simply quit like any other time in my life, like a job I had for 3 years, never smoked because I was always being tested. Sure I missed smoking pot, but only because I enjoy it, not because I’m addicted to it.
Sooooooooo, whats the damn holdup, legalize this shit.
more importantly i would think people would gravitate away from using and/or abusing prescription drugs in addition to alcohol and tobacco.
@ #10 Delpart: With alcohol and tobacco usage going down, that means the HEALTH COSTS associated with the sick, dying, and dead due to alcohol and tobacco would also go down, which means LESS health care costs – less people getting sick – less people dying – more room for other illnesses/diseases/accidents/etc. Truly, the reduction health costs associated with the usage of alcohol and tobacco would more than make up the lost of the ‘sin’ tax revenue. Plus people will be much healthier and happier – I guarantee it.
okay, so the government is going to place a 50 dollar fee on top of the already street prices? Wake up California, unless you wanna make an OZ sell for 100 bucks, I wouldn’t pay 400 an OZ and THEN 50 bucks more, when I can just get it from a dealer for 400….get it? California is inflating the prices. The reason pot is 80-120 a quarter is because it’s illegal. Pot shouldn’t cost that much if it’s legal. God bless capitalism in that instance, which will lower costs. The Wal-Mart affect.
Wow. This bill truly could be one of the most historical bills, as such a move to legalization would definitely have an effect on CA, and then I would imagine a rapid ripple effect though the whole country. This bill will definitely revoltionlize the planet. As mentioned above the applications for hemp are quite extraordinary. I’m sure there will be negative after effects that will have to be dealt with, but hope is definitely on the horizon. CA is not the only state hurting. Illinois isnt too far behind the amount of debt. Lets hope that our elected leaders have the courage to do what is right, and to do what the public is demanding. Thanks to all of you who have sacrificed much to get us this far.
and don’t just celebrate contact the Public Safety commitee members as well as the Heatth Commitee members. Local politicans have a bigger ear to the individual voter then the federal politicans.
Public Safety:
Committee Members District Phone E-mail
Juan Arambula – Chair Ind-31 (916) 319-2031 Assemblymember.arambula@assembly.ca.gov
Curt Hagman – Vice Chair Rep-60 (916) 319-2060 Assemblymember.Hagman@assembly.ca.gov
Tom Ammiano Dem-13 (916) 319-2013 Assemblymember.Ammiano@assembly.ca.gov
Warren T. Furutani Dem-55 (916) 319-2055 Assemblymember.Furutani@assembly.ca.gov
Danny D. Gilmore Rep-30 (916) 319-2030 Assemblymember.Gilmore@assembly.ca.gov
Jerry Hill Dem-19 (916) 319-2019 Assemblymember.Hill@assembly.ca.gov
Fiona Ma Dem-12 (916) 319-2012 Assemblymember.Ma@assembly.ca.gov
Commitee on Health:
Committee Members District Phone E-mail
Dave Jones – Chair Dem-9 (916) 319-2009 Assemblymember.jones@assembly.ca.gov
Nathan Fletcher – Vice Chair Rep-75 (916) 319-2075 Assemblymember.Fletcher@assembly.ca.gov
Anthony Adams Rep-59 (916) 319-2059 Assemblymember.Adams@assembly.ca.gov
Tom Ammiano Dem-13 (916) 319-2013 Assemblymember.Ammiano@assembly.ca.gov
Marty Block Dem-78 (916) 319-2078 Assemblymember.Block@assembly.ca.gov
Wilmer Amina Carter Dem-62 (916) 319-2062 Assemblymember.Carter@assembly.ca.gov
Connie Conway Rep-34 (916) 319-2034 Assemblymember.Conway@assembly.ca.gov
Hector De La Torre Dem-50 (916) 319-2050 Assemblymember.DeLaTorre@assembly.ca.gov
Kevin de Leon Dem-45 (916) 319-2045 Assemblymember.deLeon@assembly.ca.gov
Bill Emmerson Rep-63 (916) 319-2063 Assemblymember.emmerson@assembly.ca.gov
Ted Gaines Rep-4 (916) 319-2004 Assemblymember.Gaines@assembly.ca.gov
Isadore Hall III Dem-52 (916) 319-2052 Assemblymember.Hall@assembly.ca.gov
Mary Hayashi Dem-18 (916) 319-2018 Assemblymember.Hayashi@assembly.ca.gov
Edward P. Hernandez Dem-57 (916) 319-2057 Assemblymember.Hernandez@assembly.ca.gov
Bonnie Lowenthal Dem-54 (916) 319-2054 Assemblymember.Lowenthal@assembly.ca.gov
Pedro Nava Dem-35 (916) 319-2035 Assemblymember.nava@assembly.ca.gov
V. Manuel Pérez Dem-80 (916) 319-2080 Assemblymember.Manuel.Perez@assembly.ca.gov
Mary Salas Dem-79 (916) 319-2079 Assemblymember.Salas@assembly.ca.gov
Audra Strickland Rep-37 (916) 319-2037 Assemblymember.strickland@assembly.ca.gov
$50 an ounce for taxes alone?? I hope this isn’t the case. I’d rather go to the backalley than give $50 to Uncle Sam for an ounce.
It’s hard for me to believe that marijuana legalized for personal use is going to change the habits of liquor and cigarette users. A couple of shots of liquor once or twice a month or even once a week breaks the boring stigma of constantly being high everyday. This may sound strange but I believe liquor sales will rise after POT has been legal for a short time. Guess we’ll see what happens in the near future!
i am moving to cali
hell yeah man legalize da herb!
But wait…if you act now, we’ll sweeten the deal (RIP BM)
Ok seriously…look deeper then just the Cannabis Taxes.
Just imagine how many people who enjoy and respect cannabis (1 – 2 Million) are going to visit just to enjoy a little legal weed.
While they are there…
Gonna buy some weed – Cannabis tax
Gonna need a place to stay – Hotel tax
Gonna need something to eat – Restaurant tax
Maybe get a beer – Liquor tax
Maybe get a pack of smokes – Tobacco tax
Rent a car & buy gas – Gasoline tax
Take in some tourist attractions – Entertainment tax
Not to mention the money that will be injected into the community….
1st state to legalize is going to see one heck of a cash flow injection from all the tourists
California’s legalization would def bring back Led Zeppelin’s going to california in a whole new meaning!We would all want to be there!
If that’s what it takes to get people on the bandwagon, then by all means spread this bloated, unrealistic figure, but Ammiano’s bill sucks and I hope it will be changed before it becomes law. The tax rate is way too high, and there are no provisions for regulating the product, only for regulating the distribution of it.
How about people get over the Drug War hysteria and just legalize marijuana with a modest, reasonable tax, and regulate the purity of the product instead of requiring armed guards during its production and distribution?
My full critique is at http://legalizationwiki.org, along with a proposal for a much better law which originated in Massahusetts.
Im From iowa i might have to move to Cali too
Politicians lag so far behind what the public wants.
Special interests… enough said. Marijuana prohibition is a lovely form of SOCIAL CONTROL. Keep the blacks down and in jail. Whitey who gets caught with marijuana will have his parents bail him out time and time again. BTW I’m white.
I know that when I have some herb, I feel much less like drinking. If someone is trying to quit a substance that is actually harmful, MJ has a therapeutic effect, it can help people trying to quit opiates.
DO A BARREL ROLL!!!
Will people pay anything over $50 an ounce for something anybody could grow on a windowsill? I don’t think so. If you can buy cannabis leaf and flower legally, then you could also buy seeds legally too. The price of seeds would go way down and you could probably get them at your local hardware store.
And the stuff circulates pretty easily. Once you could grow your own, people would be throwing away the stuff they couldn’t smoke. People would be passing the stuff around like too many zucchinis.
But the most important thing is that once legalized, the black market vanishes and the whole clandestine traffic out on the street and into the schools would be reduced to much more manageable levels. The whole sexy forbidden pleasure aspect of cannabis would evaporate. No more jail time means no more gang influence.
Few of you realize that the prices of course would drop, there for somewhat compensating for the $50 per ounce fee. And an ounce of marijuana is a lot of weed, so that’s only $12.50 of fees for a 1/4th, and only $6.25 for an 1/8th. Added to low prices that would decrease many fold due to legality, that’s still pretty cheap. It’s a win-win-win scenario. Less spending on the drug war, revenue, cheaper marijuana. And there are more and many more wins that I don’t have the time or space to mention, and I’m sure you all know them.
I’ve been skeptical of California getting away with controversial legislation ever since Proposition 8 passed (goddamn bigots), but seeing as how this has support on both sides of the isle, we may actually have a chance. But leave it to an old fart Conservative fucktard to block it down. Don’t celebrate yet, this is FAR from over. Although this is a tremendous step forward, ust take a grain of salt with this. Until the Govenator puts his pen on this bill and signs it, this isn’t over yet, and I won’t believe it.
LEGALIZE! Time to move forward!
@ #29: Rick Seymour, Tennessee Activist: Though it may not curb existing alcohol and tobacco users to a certain extent, with legalization and regulation comes education for the youth so that the youth will make an informed and educated decision when they do reach that point of recreational usage. I would suspect that zero deaths caused by marijuana along with its health benefits would deter users from using alcohol or tobacco. I would say the statistics of deaths caused by the latter two would alone be enough to convince them otherwise.
For the peace of mind to smoke legaly id pay $50 tax an ounce.
This is a big step and if/when it does become legalized and taxed in one state then if the govt. does not legalize and tax it nation wide other states should follow suit as that of the state which does then eventually their will be no other option but to listen to the people of this nation and do something on a nation wide level that is for the people . That is unless the officials want to get / remain in office. As for those who are not for legalization and taxation or at the least declassify it then I say lets show our numbers at voting time and not elect / re-elect them into office. 1 vote is nothing to them how ever 10,000 votes means the difference between winning or loosing the election.
Can we possibly get numbers on how much INDUSTRIAL HEMP can produce? That’s an argument I never hear. This is just from smokable marijuana. Imagine if we replaced petroleum with hemp!
50 bucks an ounce would be a small price to pay to keep our brothers and sisters out of jail. Competition would eventually even out the market. As it became more socially acceptable to use it for medical, new compounds and uses would be developed as research would not be stymied.
Wow! I’m starting to believe this can really happen.
Dude at #25:
80-120 a quarter! I hope your talking about some really good sativa or kush.Round here we can get some good cannabis for 25-30 a quarter. Maybe good homegrown but still..
Truth Will Prevail!
To me, it seems obvious that if people had a choice between equally legal pot or alcohol, they would largely choose pot. I forsee a major reduction in violence (domestic and otherwise) and a major increase in snack food sales
Re-legalizing cannabis for tax money? What about God’s will for people to live in freedom with liberty as acknowledged and cited in the Constitution of the United States? Is money more important than God? Sorry, I forgot. In America today, money is our God.
#21- I did the same thing to quit smoking cigarettes. I just replaced it with weed, and after about a year, I jst got tired of it. Of course I smoke weed again now but, I haven’t had cigarettes in years. I couldn’t smoke one if I wanted to, the smoke is far too harsh. I know others that have quit cigarettes the same way.