California’s budget woes are well documented, and in many ways, representative of the overall pain facing states as the recession lingers. Even when lawmakers announced a deal to close the $26 billion deficit in California’s $92 billion general-fund budget, the news was met more with apologies than applause. That’s because to close that $26 billion gap lawmakers agreed to over $15 billion in spending cuts, including slashing $9 billion from education, $1.3 billion from state-worker furloughs, and $1.2 billion from the prison system. Quite simply, California needs more revenue, and San Francisco Democratic Assemblyman Tom Ammiano has a plan.
In February Ammiano introduced a bill that would allow adults 21 and older to legally possess, grow, and sell marijuana. According to the California State Board of Equalization (California’s tax entity), the bill would generate nearly $1.4 billion in revenue for the cash-strapped state. Certainly not enough to fix California’s budget woes on its own, but according to supporters of the legislation, a good start.
The board estimates that marijuana retail sales would bring in $990 million from a $50-per-ounce fee and $392 million in sales taxes. The board revenue estimates do not even factor in the savings associated with no longer housing marijuana offenders in state prisons, resources expended in the judiciary dealing with these offenses, and the ancillary costs associated with enforcement operations.
The bill would regulate marijuana essentially like alcohol, and require that all revenue generated by the $50-per-ounce fee be used for drug education and rehabilitation programs. The current version of the bill envisions the state’s 9 percent sales tax applied to retail sales, with the fee likely charged at the wholesale level and built into the retail price. The bill is still in committee with hearings on the legislation expected in the fall. In anticipation of these upcoming hearings proponents of the measure launched a new television ad stating that marijuana consumers are ready and willing to pay taxes on their vice-in exchange for no longer being treated as criminals.
The movement appears to have momentum at the local level as well. Late last month three Los Angeles City Council members proposed taxing medical marijuana to close the city’s budget gap, and a group of criminal defense attorneys submitted a marijuana legalization measure to the state attorney general’s office, the first official step toward putting the legalization question directly to California voters via ballot initiative. Once the attorney general’s office provides an official summary of the proposed initiative, the group can begin gathering signatures. It will need about 443,000 signatures to place The Tax, Regulate and Control Cannabis Act on the November 2010 ballot. As proposed the initiative would repeal all state and local laws that criminalize marijuana.
While cost-benefit analysis concerning use and regulation of marijuana are difficult at best to pin down, advocates were pleased with the estimated revenue projections issued by the Board of Equalization. The Board used law enforcement and academic studies to calculate that Californians consume about 16 million ounces, or 500 tons, of marijuana each year. Representatives for the board made a specific choice to look at multiple reports from multiple sources concerning use and impact of legalization in an effort to provide as sober a projection as possible.
The logic behind the movement is pretty clear- before California begins shutting down vital services, slashing school spending, and further straining a corrections system on the brink- lets make sure all potential revenue sources are accounted for and tapped. Only then should we stress further infrastructure already at the brink. Until then, let’s tax the citizens standing up and volunteering their money for the greater good of the state and finally bring some sanity to our drug enforcement laws.
For more information on the measure and related legalization efforts, visit here.
photo courtesy of RobotSkirts via Flickr.