Doobie Dollars – California’s Addicted

With the approval of medical marijuana under its belt, California is now looking for that next big score: the total legalization of marijuana. Why? Well, it is not just to appease the millions of Californians who want it for their personal enjoyment, but also to lure of billions of dollars in potential tax revenue for the state’s coffers. With the drive of an addict, California has seen the cash medical marijuana is bringing into the system through tax revenue. So now the state wants more. A lot more.

In 1972, the United States Congress placed marijuana in Schedule I of the Controlled Substances Act, the classification that deems a substance of “no accepted medical use.” Proponents argued that marijuana can be a safe and effective treatment for the symptoms of cancer, AIDS, multiple sclerosis, and many other conditions. They cite dozens of peer-reviewed studies, prominent medical organizations, major government reports, and the use of marijuana as medicine throughout recorded history. In the 41 years since, 17 of 50 states and DC have legalized the medical use of marijuana. Another 8 states have pending legislation. But it all began in California.

On November 5, 1996, when Proposition 215 was approved by 56% of the voters, California became the first state to buck the federal law and approve marijuana for medicinal use. Since that time, the medical cannabis industry has ballooned into an enterprise that generates more than $10M in tax revenue for the state. In addition to the taxes generated, the state has realized substantial savings related to apprehension and prosecution of offenders, as well as generated more jobs throughout the supply chain.

In 2010, with Proposition 19, California was poised to become the first state to totally legalize marijuana. The ballot measure fell short by a small margin. It was felt the reason for the defeat was the lack of regulations in place to control it. Many believe, however, that the groundwork done by California paved the way for Washington and Colorado’s successful bids for legalization this past November.

California’s planned next move will be to propose a statewide regulation initiative on the ballot in 2014, followed by a call for full scale legalization on the ballot in 2016, a presidential election year with higher voter turnout. Tom Angell, founder of the website Marijuana Majority, states that the people in California are excited to push it over the finish line sooner rather than later.

It is little wonder that the state would propose legislation to expand the legal use of marijuana to include recreational use. California officials estimated a state pot tax of $50 per ounce, equivalent to the tax on cigarettes, could generate as much as $1.4 billion in new tax revenue. According to federal estimates, marijuana is already California’s number-one cash crop, worth double the state’s vegetable and grape crops combined, or about $14B per year. Undoubtedly, Sacramento is attracted to the extra income that the pot tax would yield – particularly as the state of California hemorrhages businesses and residents due to its sky-high personal income tax.

I believe that the ongoing disagreement over whether to legalize marijuana can be decided by simply looking at history. The prohibition of alcohol failed in the 1920s because $300 million dollars were spent on law enforcement and $11 billion more lost in tax revenue. Yet people still found ways to get their booze, even if they had to make it themselves. Marijuana users have found ways to get their ganja too, simply growing it themselves if they must.

It is virtually certain that California will approve legalization of marijuana. Critics be damned, there is just too much potential money there for them to kick the habit now.