California Considering Legalizing and Taxing Marijuana to Solve Budget Woes
California, which is one of the world's largest economies, is facing insolvency. To solve that problem some groups are calling for the legalization of marijuana. Proponents say that the taxes off the sale of marijuana would make the state's budget woes disappear in a puff of fragrant smoke.
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.
A new pot legalization measure has been submitted by three criminal defense attorneys to the state attorney general's office. After it is reviewed, supporters of the movement can start getting signatures. Approximately 443,000 signatures are required to put the proposed Tax, Regulate and Control Cannabis Act on the November 2010 ballot.
Even if the state of California did decide to legalize marijuana, the sale and use of the drug is still illegal under federal law.
