September 29, 2010 | 12:52 PM | By

Proposition 19: Measuring marijuana money

FILED UNDER: Politics, Board of Equalization, Capitol Weekly, Legislative Analyst's Office, Marijuana, Proposition 19

humblog

How much green are we talking here?

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?”

  • http://pulse.yahoo.com/_2LUAGHYOT7T3MG7KKQE2XXVVHI Neos

    State sales tax alone will bring in quite a bit. An estimate of the Marijuana industry is something like $14 Billion of which the state gets none at the moment.

    Prop19 will have Marijuana regulated and taxed the same way alcohol is. All this fear mongering from those against prop 19 likely have other motives to spread misinformation. A lot of special interests make money off Marijuana prohibition: Big Alcohol, Big Tabacco, Big Pharma, Private Prisons, Law Enforcement. Lets stop fueling their greed and pass this prop for the public and for personal freedom.

  • Cathal

    The gist of the article is we dont know exactly how many billions of dollars prop 19 will bring in… Therefore vote no! Retarded behaviour!

    Im sure they would have a rough idea how much money can be generated and it would be a lot especially in terms of employment building factorys, running the factorys and sales.

    this is a very stupid and pointless article

  • ZZardozz

    When we see estimates that Cannabis could bring in 1.45 billion, that is based on a 10% sales tax on 14 billion in volume. There could be grower's licenses, for personal, or commercial production. There are many ways they could go.

    By the way, passing a re-legalization law prior to Federal re-legalization is not unprecedented. New York repealed all their state alcohol prohibition laws in the mid-20s, and told the Feds that if they want it stopped, they can hire the officers and police it themselves. There were 30,000 speakeasies in New York. Why, that's more than Starbucks!

  • http://twitter.com/shampoovta kelley davis

    I have seen the ballot. That is as official as it gets. This article is not official. Lets see who do I go with? A random paper I have never heard of before or the sample ballot I have just received from my beloved state? Nice try idiots. :(

  • PabloKOh

    Why are we even talking money? Prop 19 will allow our local police forces to attack violent crime instead of spending nearly 6 hours per cannabis possession case. This gets our cops out on the street instead of in court testifying against cannabis users. This is a public safety issue more than a revenue issue. In 2009 there were 17,008 felony and 61,164 misdemeanor marijuana arrests. Even if a felony case only took 12 hours and misdemeanor case 6 hours, we still spent 306,144 hours of police work on cannabis. That does not even include the time of our state prosecutors. Prop 19 is a realignment of our priorities that should have happened 20 years ago.

  • Christian

    Jesus said to treat other people the way we would want to be treated. I know I wouldn’t want my college kid to go to jail with the sexual predators, or my parents to have their house stolen by the police, if they used a little marijuana.

    Let’s change the world. Let’s get registered and vote.

    Citizens and college students in California can register at

    w w w . sos.ca.gov/elections/elections_vr.htm .

    (just fill out the form and mail it in).

    And you can request a ballot by mail at

    w w w . sos.ca.gov/elections/elections_m.htm .

    In other states, Google your state name and the phrase, voter registration. Print off the form and mail it in (or drive it down to City Hall).

    Five minutes. Register to vote. Change the world. Right now.

    Pass it on

  • Rina Palta

    An update: Board of Equalization Chairwoman Betty T. Yee has now made a statement on the report–basically says there's no way she can give a credible estimate on prop19 revenue, but that this is a “healthy” opportunity to get California debating the merits of legalization. http://bit.ly/alYIlE

  • Norcal415

    If cities started to grow and sell marijuana themselves, I bet it would bring in more than $10 billion per year. This would be a lot more bold than simply taxing it, but since they will be able to control who can and can't sell, they could have a legalized monopoly on distribution. One of the city council members in Santa Monica is already talking about introducing this type of program.

  • ginpb

    California became great during the Gold Rush, so let's get out of this depression by starting a GREEN RUSH! The number of new jobs and increased tourism alone will bring in millions of tax dollars, not to mention allowing our police to focus on violent crime, reducing court backlogs, reducing prison overcrowding, it's just a no-brainer!

    Join the VOTE YES ON PROP 19 movement: http://facebook.com/YesOnCAProp19/

  • Money

    There is no money. If there is, it will be business as usual. The money will go to the lucrative pension plans of government employees. That's why California is broke in the first place.

  • smokelakecity

    Absolutely worth the headache. It's time to get the ball rolling … I was in high school in the 70's when the cops treated pot as a no-big-deal, if caught; they'd make you pour out your baggy or you got a stern talkin' to … but with the help of the DEA; law enforcement got greedy – it became more important to make a little $$$ for the department than enforce any real law – -they pushed too hard ruined too many people's lives ~ so as I see it law enforcement has caused this movement to legalization – and oh yeah, it's gonna happen now ~got greedy, now the teet is drying up …

  • Mywaterview

    At last a person with brains,the only one here.

  • Jamesfilms

    What PabloKOh is failing to tell you, is that Governor Arnold Schwarzenegger signed Senate Bill 1449 into law on October 1, which effectively decriminalizes minor marijuana possession. If you're caught with less than one ounce of marijuana, your offense will be treated as an infraction (like a parking ticket) rather than a misdemeanor (which requires a court appearance). As an infraction, a simple pot bust will be punishable by a $100 fine. This new law removes any concerns about where the attention of law enforcement should be. And the argument for freeing up judicial time is moot.

  • Jamesfilms

    Where are your sources that tell you that prop 19 promises new jobs and tourism that will bring in millions? and less then 1/2% of people in prison are there for marijuana. According to BOE they have no idea how much money prop 19 will bring, if any. Your forgetting that anyone can grow it tax free.

  • VotingYESon19

    James, anyone can make their own beer too, but how many do? Not to mention growing a few plants takes 3-4 months before you harvest, WAY longer & more time intensive than making beer, so the chance everyone will 'grow their own' are slim to none.

    Amsterdam makes millions in tourism, & it's not all to look at their windmills & tulips. All those people would now come to California, increasing hotel bookings, car rentals, restaurant revenue, etc. 1 example of a new business is the 'limo tours of temecula/napa/sonoma' for wine drinkers could be remodeled for MJ tourism – think limo trips to grow warehouses, educational classes, food served w/ infused thc, etc.

    Do I really need to show you 'sources' for this info, or can't you use your own mind to figure it out? New opportunities in new realm of legal business will bring entrepreneurs starting new businesses, it's a no-brainer.