Legislative Analyst on Taxing Marijuana — Check the Source

Proponents of Proposition 19, which would legalize marijuana and allow its sale to be taxed, issued a recent press release regarding the assessment of the measure by the Legislative Analyst that will appear in voter guides for the November election.

The release from “Control and Tax Cannabis 2010” notes the analyst “provides non-partisan fiscal and policy advice” in its first sentence. The release continues:

“The report found that Proposition 19 would enable California to steer police resources toward more pressing matters, generate hundreds of millions in revenue to fund vital services, and protect children, roadways, and workplaces,” the release says.

“According to the report,” the release says, ‘Proposition 19 allows local governments to authorize, regulate, and tax various commercial marijuana-related activities. As discussed below, the state also could authorize, regulate, and tax such activities… we estimate that the state and local governments could eventually collect hundreds of millions of dollars annually in additional revenues.’ And, the release says, the analyst confirms that “Proposition 19 would enable California to put our police priorities where they belong” by reducing the number of marijuana offenders in prison and jail or on probation or parole.

The analyst makes some other points as well.

Chief among them is that it’s hard to predict what the proposition’s impact would be.

“Many of the provisions in this measure permit, but do not require, the state and local governments to take certain actions related to the regulation and taxation of marijuana. Thus, it is uncertain to what extent the state and local governments would in fact undertake such actions.

“For example, 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.”

And while the federal government said in March 2009 that it would no longer prosecute patients or providers complying with California’s medical marijuana law, it continues to enforce prohibitions on non-medical marijuana activity.

“This means that the federal government could prosecute individuals for activities that would be permitted under this measure,” the analyst writes. “To the extent that the federal government continued to enforce its prohibitions on marijuana, it would have the effect of impeding the activities permitted by this measure under state law.”

Another variable cited by the analyst is the unknown of how legalization would affect price and usage, which would affect the level of state and local revenues.

In conclusion, the analyst says: “The revenue and expenditure impacts of this measure are subject to significant uncertainty.”

On the other hand, the report also notes:

“To the extent that a commercial marijuana industry developed in the state, however, we estimate that the state and local governments could eventually collect hundreds of millions of dollars annually in additional revenues.”

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