In October 2009, the California State Board of Equalization estimated legalizing marijuana could bring the struggling state $1.4 billion in taxes each year. That figure has been touted all over the media and is included in the current pro-Proposition 19 argument in the state’s official voter guide. But almost a year later, the Board’s gone back and looked at their math–and now, they’re saying something quite different.
According to a BOE report dated September 20, 2010, the Board is unable to estimate possible revenue from the measure–they just flat out don’t know how much money legalizing marijuana would make for the state.
In trying to estimate revenue, the report says, they’re hitting a number of barriers:
- They don’t know who’ll bite: They can’t say which counties and cities will allow marijuana to be sold and come up with the structure for taxing it.
- How much would a tax be? There are no provisions in the ballot initiative setting up a tax rate or licensing fees–that happens on a local level and likely wouldn’t be uniform across different locations.
- What would an ounce of legal marijuana go for? They can’t estimate how much weed would be bought and sold, or what prices weed would yield.
Furthermore, the BOE report, says, the Board would need a minimum of eight months to implement any kind of tax or fee program. So state revenues, it seems, would not happen right away. How much do voters care about that $1.4 billion figure in the voter guide?
Dan Newman, a spokesman for the Yes on 19 campaign, says that the revenue impact of the proposition is one of its key selling points. But he says the BOE report doesn’t mean there wouldn’t be money for the state in legalizing marijuana. (Incidentally, Newman also points out that the BOE report references the election date as November 9–the real date is November 2. “I hope they send the No on 19 folks to the polls that day,” he says.) To Newman, the question is not whether marijuana legalization would raise money for the state, but if the revenue would be in the hundreds of millions or the billions. And as I’m sure many of our readers will point, out, any money is more money than the state currently gets from marijuana sales.
But by most measures, the report is still a blow: those against legalization are quick to say that Proposition 19 is sloppily written and at best, promises things it can’t deliver and at worst, is “a jumbled legal nightmare.”
The Legislative Analysts’ Office, in its assessment of Prop 19, didn’t predict such chaos, but didn’t predict specific revenues either: it could be hundreds of millions in the future, they said, but ultimately, “the revenue and expenditure impacts of this measure are subject to significant uncertainty.”
So, in conclusion, I think Capitol Weekly puts it best:
Apart from potential savings in local law enforcement, marijuana and its distributors would be subject to at least the same sales and business taxes as other taxable products in California. With sales and business tax alone, the initiative is likely to bring in at least some revenue to local governments. The evasive question is simply “how much?” and, as voiced by the No on 19 campaign, would it be worth “the headache?”