California’s Adult Use Marijuana Act Could Generate $1 Billion a Year

LOS ANGELES, CA - OCTOBER 19:  Dave Warden, a bud tender at Private Organic Therapy (P.O.T.), a non-profit co-operative medical marijuana dispensary, displays various types of marijuana available to patients on October 19, 2009 in Los Angeles, California. Attorney General Eric Holder announced new guidelines today for federal prosecutors in states where the use of marijuana for medicinal purposes is allowed under state law. Federal prosecutors will no longer trump the state with raids on the southern California dispensaries as they had been doing, but Los Angeles County District Attorney Steve Cooley recently began a crackdown campaign that will include raids against the facilities. Cooley maintains that virtually all marijuana dispensaries are in violation of the law because they profit from their product. The city of LA has been slow to come to agreement on how to regulate its 800 to 1,000 dispensaries. Californians voted to allow sick people with referrals from doctors to consume cannabis with the passage of state ballot Proposition 215 in 1996 and a total of 14 states now allow the medicinal use of marijuana. (Photo by David McNew/Getty Images)

According to a new report unleashed by the California Department of Finance, the legalization of recreational marijuana in California could represent approximately $1 billion in new revenue for the cash-strapped state.

Currently facing a wall of debt estimated to be a in the neighborhood of $443 billion, California’s Department of Finance director Michael Cohen, and legislative analyst Mac Taylor, informed Attorney General Kamala Harris that California stands to gain approximately $1 billion in fresh tax revenue – provided voters pass the Adult Use of Marijuana Act (AUMA) and legalize recreational marijuana during November’s general election.

“In total, our best estimate is that the state and local governments could eventually collect net additional revenues that could range from the high hundreds of millions of dollars to over $1 billion annually”, according to California’s top bean counters.

Per AUMA, that new revenue would be spent on:

California’s AUMA calls for marijuana taxes to be spent on education, safety, and mental health

While $1 billion in new revenue sounds great, the report warns that California’s final savings could fluctuate based on a number of variables; such as countywide bans of all marijuana sales, the current consumption rate declining, and the biggest wildcard of them all…the federal government.

According to the report, the Golden State’s newest financial windfall would be generated by a 15% excise tax on all recreational pot sales, a $9.25 per Oz. tax on the cultivation of all flower, and a $2.75 tax on all leftover plant material.

In addition to cutting the overall state and local governments total expenditures for prosecuting marijuana related offenses, by potentially $100 million annually, individuals previously convicted of marijuana related crimes would be eligible to be resentenced under new guidelines.

Read full report here

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