Where would $1 billion in pot money go if California marijuana is legalized?
If you probe why the polls show a majority of California voters support a statewide effort to legalize recreational marijuana, increased tax revenue inevitably comes up.
UC Irvine student Giovanni Chavez, like many backers of legalized pot, says hes primarily concerned about personal liberty and studies showing disproportionate prosecution of minorities for drug offenses.
But after watching state and local governments struggle through recurring budget crises, the aspiring political consultant said state-regulated marijuana sales would provide a new and needed stream of tax dollars.
We could use the extra revenue, said Chavez, 21. And the fact that we would be able to interfere with the black market is huge.
Supporters of legal recreational marijuana use point to Colorado, which legalized cannabis for adults in 2012. There, taxes and fees on weed are helping to build schools, repair roads and stabilize city budgets.
But critics of Proposition 64, Californias legalization initiative on the November ballot, point out tax revenue from legal weed would be dispersed much differently here.
Letitia Pepper, a Riverside attorney who uses medical marijuana to treat multiple sclerosis but is a vocal opponent of the measure, noted none of it would be dedicated to the general operations of local governments or schools.
Proponents acknowledge Californias measure includes key differences in how pot funds could be used. But they add that local governments and students still can benefit from the measure.
An estimated $1 billion in new tax revenue would be directed toward specific new or expanded programs such as drug use prevention and treatment, helping at-risk youth, law enforcement, environmental clean-up and research.
Jason Kinney, spokesman for the Yes on Prop. 64 campaign, said the restrictions on public use of the new tax monies was intentional. If public agencies were allowed to balance their general spending budgets with marijuana taxes, he said, it could create an incentive for them to encourage a bigger marijuana industry.
The state of California shouldnt be forced to rely on increased marijuana usage to address future K-12 education, infrastructure and other ongoing budget obligations, he said.
Instead, Diane Goldstein of North Tustin a retired police officer whos campaigning for Prop. 64 argued that tax revenue from the measure would be wisely used to offset some financial and social harms of the failed war on drugs via increased investment in education, research and treatment.
REVENUE PREDICTIONS
Right now, hundreds of pot businesses operating in California some with local permits and many without are paying state sales tax of close to 8 percent.
In 2015, the state took in $58 million in sales tax revenue from some 974 registered dispensaries, including nearly 400 in Los Angeles County and 70 to 80 each in Orange, Riverside and San Bernardino counties, according to Board of Equalization data.
That revenue is on track to nearly double this year.
Under Prop. 64, all marijuana sales would be taxed an additional 15 percent starting Jan. 1, 2018, on top of levies on regulated growers of $9.25 per ounce for dry flowers or $2.75 per ounce for leaves. Medical cannabis patients would be exempt from the state sales tax.
The independent Legislative Analysts Office predicts Prop. 64 state tax revenues would total from the high hundreds of millions of dollars to more than $1 billion each year.
Thats less than 1 percent of the states annual budget, or about what California brings in annually now from taxes on tobacco products.
Keith Humphreys, a Stanford University professor who served on a state commission that studied approaches for legalizing marijuana, summed up the financial impact of Prop. 64 this way: Its not going to make us if we do, and its not going to break us if we dont.
Tax revenue from legalized weed would first be used to cover all reasonable costs incurred by the state to administer and enforce the recreational cannabis regulations, according to the ballot measure.
The Department of Consumer Affairs, which would oversee the new marijuana marketplace if Prop. 64 passes, doesnt have an estimate yet of those administrative costs, according to spokeswoman Veronica Harms.
The much smaller states of Oregon and Washington spend about $6 million and $8 million a year, respectively, on their medical and recreational programs.
Colorado, which has the oldest and most robust recreational marijuana market in the nation, is budgeted to spend $16.3 million regulating legal marijuana this fiscal year, according to Robert Goulding, spokesman for the Colorado Department of Revenue.
The program pays it own way, Goulding noted, with industry taxes, licenses and fees covering administrative costs while helping fund such things as school construction, youth education programs and poison control centers.
Still, Prop. 64 opponents, including Orange County Sheriff Sandra Hutchens, say theyre concerned that tax revenue from legal marijuana sales wont cover harder-to-quantify effects on public safety and health issues.
WHAT ABOUT LOCAL BENEFITS?
One statewide Colorado levy on pot provides cities with money to use as they choose. That allowed Denver to add $29 million to its general fund budget in 2015, the Denver Post reports.
While Prop. 64 doesnt provide new, dedicated revenue directly to cities and counties, proponents say there are still ways local governments ...
