The price of marijuana could plummet as much as 80 percent, and consumption would rise, if Californians approve Proposition 19, the cannabis legalization measure on November’s ballot, according to a detailed analysis by researchers at Rand’s Drug Policy Research Center.
Currently between $300 and $450 an ounce in California, the cost of pot could drop as low as $38 by eliminating the expenses and challenges of operating in the black market, according to the study, reports John Hoeffel at the Los Angeles Times
The researchers admitted they weren’t certain how much pot use might be spurred by cheaper prices, but they noted one typical estimate is that a 10 percent drop in price typically increases use by about three percent. Other factors, such as getting rid of the legal risks associated with marijuana use, could also increase usage between five percent and 50 percent.
It is impossible to predict tax revenues from the initiative, according to the report, especially since Prop 19 leaves taxation up to individual cities and counties. Based on a statewide $50 per ounce tax proposed in San Francisco Democratic state Sen. Tom Ammiano’s legalization bill, the report said tax revenues could be between $650 million to $1.40 billion.
“California voters and legislators face considerable uncertainty because it is very difficult to estimate how much more marijuana will be consumed in the state or how the change will affect tax revenues, criminal justice costs and healthcare costs,” the study concluded.
If the per-ounce cost of marijuana indeed dropped to $38 and Ammiano’s $50 per ounce excise tax passed, more than half the cost of California pot would be taxes — which, as Hoeffel points out
, would be “likely to inflame marijuana idealists who see it as a natural weed that ought to be treated like an herb.”
The report noted that Ammiano’s proposed tax is about 10 times the rate of California’s tobacco taxes. Taxes that high could create an incentive for tax evasion that is more lucrative than smuggling marijuana from Mexico to California, and it could also push smokers to turn to the highest-potency marijuana to get more bang for the buck, according to the report.
Even if Prop 19 is approved, marijuana would remain illegal under federal law, and nobody seems sure how the Obama Administration might respond.
The state spends about $300 million a year on marijuana prohibition, researchers calculated. Previous pot enforcemenbt estimates had ranged between $200 million and $1.9 billion.
California could become a big exporter of marijuana if the federal government takes a passive role, researchers said, reports Peter Henderson at Reuters
“California could actually make a lot of money from taxing marijuana and then exporting it to other states,” Rand researcher Beau Kilmer said.
Dale Gieringer of California NORML gave a mixed review to the report and its conclusions.
“The report is solid, though it says little new,” Gieringer said.
“Overall, this report casts more smoke than light on the issue, but that is in the nature of any academic study where so many basic facts remain in dispute,” Gieringer said.
“The most important lesson to be taken away is that the benefits of legalization depend strongly on how it is implemented,” Gieringer said. “Passing a bill or initiative is therefore just the first step in a lengthy process requiring many additional, carefully considered policy decisions.”
A recent Reuters/Ipsos poll
showed state voters nearly evenly divided on marijuana legalization.