Pubdate: Thu, 23 Sep 2010
Source: Capitol Weekly (Sacramento, CA)
Copyright: 2010 Capitol Weekly Group
Contact: http://www.capitolweekly.net/contact/?_c=xtakf2zb939jem
Website: http://www.capitolweekly.net/
Details: http://www.mapinc.org/media/4194
Author: Jennifer Chaussee
Cited: Proposition 19 http://yeson19.com/
Referenced: The Marijuana Control and Regulation Act of 2010 
http://drugsense.org/url/7qznJE9I
Bookmark: http://mapinc.org/find?272 (Proposition 19)

FOLLOW THE MONEY: THE IMPACT OF LEGALIZED POT

The arguments surrounding the controversial measure to legalize and 
tax the recreational use of marijuana have relied at least in part on 
speculation.

Aside from the ideological and political differences that pit the 
measure's supporters against its opposition, neither side knows for 
sure how the initiative will affect California's economy.

Proponents of the Nov. 2 ballot initiative, Proposition 19, say 
decriminalizing the recreational use of marijuana would allow the 
state to rake in some much-needed cash by taxing sales of the herb. 
The Yes on 19 campaign stated that the Board of Equalization 
estimated the measure would bring in an additional $1.4 billion in 
annual revenue.

But that estimate came from an analysis of a different piece of 
cannabis legalization legislation authored by Assemblyman Tom 
Ammiano, D- San Francisco. That bill seeks a $50-per-ounce taxation 
rate on marijuana sales. And the debate over the dollar impact is 
almost as fierce as the debate over the initiative.

The literature of Proposition 19 does not include any such tax. In 
fact, the measure itself does not require local governments to impose 
a set tax on the sale of marijuana nor does it require local 
governments to license marijuana distributors.

Nate Bradley, a member of a pro-Proposition 19 group Law Enforcement 
Against Prohibition and a former Sutter County Deputy Sheriff, said 
the measure is written this way to gradually attract local 
governments to the economic and social benefits of legalizing and 
taxing marijuana.

Bradley said focus group studies revealed more people were 
comfortable with legalizing marijuana under the condition that their 
local governments were able to participate voluntarily. "One county 
will start (selling marijuana) and others will follow," said Bradley.

Board of Equalization spokeswoman Anita Gore said that without a set 
taxation rate to work with, estimating the potential fiscal effects 
of Proposition 19 is almost impossible. There is no telling, said 
Gore, what counties will participate in the sale or taxation of 
marijuana. Out of those counties that would embrace the new law, it 
is equally unclear how they will choose to tax recreational cannabis.

The BOE released an analysis of Proposition 19 just recently but the 
report did not include a conclusive fiscal analysis of the initiative.

"The legalization policy proposed by this measure complicates the 
revenue estimation task considerably," read the BOE's fiscal analysis 
of Proposition 19.

The board staff said it does "not know which local jurisdictions will 
choose to authorize the sale of marijuana products... (and) is not 
able to create estimates of marijuana consumption and price at the 
local level."

The report also noted that the tax experts on the BOE staff were not 
able to estimate the impact that legalization, local regulation, and 
taxation will have on the consumption and price for those 
jurisdictions that choose to authorize sales.

The Legislative Analyst's Office, the Legislature's nonpartisan 
fiscal adviser, faced similar challenges in its report on Proposition 
19 but was able to provide a rough revenue estimate. "We estimate 
that the state and local governments could eventually collect 
hundreds of millions of dollars annually in additional revenues." But 
even the LAO's estimate was trimmed by disclaimer.

"The revenue and expenditure impacts of this measure are subject to 
significant uncertainty...It is unknown how many local governments 
would choose to license establishments that would grow or sell 
marijuana or impose an excise tax on such sales."

A study by the nonprofit research group RAND echoed the uncertainty.

"There is considerable uncertainty about the impact of legalizing 
marijuana in California in public budgets."

But the RAND report also noted that "the pretax retail price of 
marijuana will substantially decline, likely by more than 80 percent. 
The price the consumers face will depend heavily on taxes, the 
structure of the regulatory regime, and how taxes and regulations are 
enforced."

The No on 19 campaign has sharply criticized the measure for being 
vague and sloppy in its wording, referring to it as "a jumbled legal 
nightmare."

Spokesman Roger Salazar said, "The revenue is not going to be 
anywhere near what the proponents claim. There is nothing in the 
initiative that lays out what the taxes should be on marijuana if 
Proposition 19 passes. It wouldn't be worth the headache."

Assemblyman Ammiano introduced a follow up bill Tuesday that would 
create the Marijuana Control and Regulation Act of 2010, to take 
effect after the passage of Proposition 19. The objectives of the act 
include raising funds and trying to "discourage substance abuse by 
the imposition of a substantial fee on the legal sale of marijuana, 
the proceeds of which will support drug education and awareness programs."

A part of those funds will come from charging a licensing fee to 
marijuana sellers.

"The fee for the license shall be set at an amount that will 
reasonably cover the costs of ensuring compliance with the 
regulations to be issued, but may not exceed five thousand dollars 
($5,000) for an initial application, or two thousand five hundred 
dollars ($2,500) per year for each annual renewal."

The act also specifies that no person can legally sell marijuana or 
any of its derivatives without proper licensing.

Apart from the concerns over how much revenue the measure may or may 
not provide to the government through taxation, a group of medical 
marijuana distributors have raised concerns that Proposition 19 
threatens the rights of patients who rely on cannabis prescriptions 
by jeopardizing medical marijuana distribution businesses.

The newly formed group known as the California Cannabis Association 
held a press release on the West Steps of the Capitol on Tuesday to 
announce their opposition to Proposition 19.

CCA President George Mull said the measure does not protect medicinal 
marijuana patients because it allows counties to decide whether or 
not they want to allow for the legal sale of marijuana within their 
jurisdictions, jeopardizing the rights of medicinal marijuana 
businesses to distribute the drug.

Mull and other CCA members, to include Lanette Davies, whose family 
owns the explosively successful Canna Care medical marijuana 
distributor, also said that Proposition 19 could impose unfair taxes 
onto licensed patients.

Ammiano's proposed Marijuana Control and Regulation Act responds to 
this concern by stating the act will. "Exclude medical marijuana from 
the fees and regulations imposed by this act."

Yes on 19 campaign spokesman Dan Newman said Proposition 19 "will not 
change or affect current medical cannabis laws or protections offered 
to qualified patients. Patients will still be able to possess what is 
needed for medical use, and patients, caregivers and medical cannabis 
collectives and cooperatives will retain all existing rights."

Despite concerns from the medical marijuana industry and a collection 
of law enforcement groups that have spoken out in opposition to 
Proposition 19, the LAO's report on the measure said it could lead to 
a reduction in law enforcement costs for local governments.

"The measure could result in savings to the state and local 
governments by reducing the number of marijuana offenders 
incarcerated in state prisons and county jails, as well as the number 
placed under county probation or state parole supervision."

Several local Democratic Party organizations agree.

"California should stop arresting thousands of non-violent cannabis 
consumers, freeing up police resources and saving millions of dollars 
each year, which could be used for apprehending truly dangerous 
criminals and keeping them locked up, and for other essential state 
needs that lack funding," read a press release from the Alameda 
County Democratic Party on its announced support of Proposition 19.

According to a press release from the Yes on 19 campaign, Democratic 
Parties in L.A., Butte, Madera, Modoc, Monterey, Orange, Placer, San 
Francisco, Siskiyou, and Sonoma County have endorsed the measure.

Bradley said one of the greatest costs to law enforcement is the cost 
of writing tickets to citizens charged with carrying less than an 
ounce of marijuana.

"The ticket is a misdemeanor charge with a maximum fine of $100 but 
it costs the county $1,000 to process...If we just stopped writing 
those tickets we'd save an instant $60 million a year."

Bradley referred to the current "drug war" as "a huge waste of money 
for local government" and said Proposition 19 would end that waste by 
freeing up unnecessary bureaucracy in the conviction process of 
marijuana users.

"It is unclear whether the fiscal benefits of Proposition 19 would be 
massive, immense, or merely substantial and significant, but there is 
no question that Prop 19 would generate billions of dollars," said 
Dan Newman, spokesman for the Yes on 19 campaign.

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?" 
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MAP posted-by: Richard Lake