California Grapples With That Other Kind of Green Revenue

California public officials today find themselves forced to address the peculiar challenge of preparing to regulate and tax a business that is currently illegal. Depending on the success or failure of the Regulate, Control, and Tax Cannabis Act on November 2, marijuana could very quickly become a commodity to be reckoned with in every California city. For a state in debt $19 billion, Josh Stephens explains on Planetizen just how profitable some have speculated the cannabis business could be:

A report authored by Dale Gieringer, California Director of the National Organization for Reform of Marijuana Laws (NORML), in October proposes that a legal cannabis market could generate between $2.7 and $4.5 billion in state excise tax revenue, several hundred million in local sales tax revenue, and $12 - $18 billion in spinoff activity, including that from tourism and coffee shops. The report compares the pot market to the $12.3 billion in-state wine market and the $51.8 billion in overall economic activity that it generates.

Oakland has took an early lead in capturing a share of that revenue through Measure F, a ballot initiative that authorized the city to raise the tax on "Cannabis business" from the 1.2 percent citywide sales tax to 1.8 percent. That’s a pittance compared to what some Tax Cannabis supporters say they are willing to pay.


However, just as with the legalization of medical marijuana, the navigation of a booming retail business is likely to be chaotic. Stephens writes:

The situation highlights the notorious oddity of the California initiative system, which often asks voters to affirm, or reject, sweeping statements of principle and then forces state and local officials to figure out how to implement—and interpret—the voters' wishes.

Localities that fail to confront and plan for marijuana legalization could end up with shady growers in every basement and retailers setting up shop in every vacant storefront and shuttered fast food joint. Meanwhile, those that prohibit marijuana will lose the potential revenue too. Those that do plan, according to some proponents, are going to have to craft land use ordinances that both uphold public safety and allow businesses to flourish.


Nonetheless, everything about the situation is deeply hypothetical at the moment. Public officials must decide how best to deal with a product that, ultimately, they might not actually have to deal with at all. To read the rest of Stephens' thorough analysis, click here.

Photo (cc) courtesy of Flickr user thetruthabout... via Planetizen.

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