Altered State?: Assessing How Marijuana Legalization in California Could Influence Marijuana Consumption and Public Budgets
Jul 2, 2010
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California Assembly Bill 2254—often referred to as the Ammiano bill—and the Regulate, Control, and Tax Cannabis (RCTC) Proposition would legalize marijuana use for those 21 and over in California. The Ammiano bill would allow the state to regulate production and distribution and initially apply an excise tax of $50 per ounce. The RCTC proposition would allow local governments to choose whether and how to regulate and tax production and distribution.
Two issues central to the debate are how legalization would affect marijuana consumption and public budgets. Governor Arnold Schwarzenegger suggested that "it was time for a debate" about legalization to generate revenue, and one government analysis estimated that taxing marijuana at $50 per ounce would generate $1.4 billion annually in revenues.
In work funded by the RAND Corporation, researchers addressed these two issues by constructing a model based on a series of estimates of current consumption, current and future prices, how responsive use is to price changes, taxes levied and possibly evaded, and the aggregation of many nonprice effects (such as changes in attitudes). The goal was to help legislators and voters understand the impact of key assumptions required for estimates, not to provide a comprehensive cost-benefit analysis of the impact of legalizing marijuana in California.
Key study highlights include the following:
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