Jobs, Taxes and Crime: Keys to California’s Pot Vote

Drug Policy — POSTED BY Joe Mellen on July 28, 2010 at 1:15 pm
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Inside City Hall in Oakland, Calif., Jim Wilcox explained his plan for a commercial marijuana farm. “My idea was a Silicon Valley of cannabis,” he told the city council recently. “An office park for pot.” The council has approved the creation, licensing and taxing of four such medical marijuana farms inside Oakland city limits.

Four hundred miles to the south in Los Angeles, it’s a completely different story. After four years running the Pure Life Alternative Wellness Center, Yami Bolanos fears her medical marijuana dispensary will be shut down. “The patients are the ones that are getting screwed royally by the city council.”

Los Angeles is cracking down hard on the number of “collectives”, which have grown like weeds in the last few years. By some estimates, there were 700 medical marijuana dispensaries a few months ago, more pot outlets than Starbucks in LA. A new law will reduce that number to 182. “The sale of marijuana has never been approved by voters,” says Los Angeles Assistant Attorney Asha Greenberg. “Cities have the ability to restrict the numbers of collectives.”

Key Points

The November initiative, would allow California residents 21 years or older to grow marijuana at home for personal useProp 19 will again put California’s marijuana laws in direct opposition to the feds.

This tale of two cities reflects a divergence of opinion in California over the future of what may be its largest cash crop. Voters will decide in November whether to legalize marijuana for recreational purposes.

The State Board of Equalization estimates that pot in California is worth $15 billion a year. Taxing it could bring in $1.5 billion in much-needed revenues. But that’s based on current prices. A Rand study suggests that if the November ballot measure passes, prices could drop 90 percent to $38 an ounce, while consumption could increase as much as 100 percent.

Jane Wells
CNBC Reporter

The November initiative, called Proposition 19, would allow California residents 21 years or older to grow marijuana at home for personal use, in an area no larger than 25 square feet. It would also allow adults 21 and older to possess and transport up to an ounce. Finally, it would allow local governments to license, regulate, and tax commercial growers and sellers. Like alcohol, sales to anyone under 21 would be banned.

“Look at all the people that are being killed in Mexico every day, as well as the home invasion robberies and other things that come from the inflated price that’s caused by prohibition,” says Richard Lee, who authored Prop 19. Lee runs Oaksterdam University in Oakland, a school which teaches people how to grow medical marijuana and run a dispensary.

Lee says the benefits of legalization go beyond sales tax revenues, and include “ancillary benefits such a tourism, jobs, and hotel rooms and transportation and food that would go along with the cannabis industry.”

“They will probably two, three, four to one outraise us financially,” says Covina police chief Kim Raney, leading the No on Prop 19 campaign, “but I think our message will be clear. I think our message will be the truth, and I think the voters in the state will understand that.”

What is clear is that Prop 19 will again put California’s marijuana laws in direct opposition to the feds. Because of that, the state’s Legislative Analyst’s Office says it’s impossible to know how much money the state might bring in.

The LAO says savings to correctional facilities “could reach several tens of millions of dollars annually,” and a new jobs-creating industry could let the state “eventually collect hundreds of millions of dollars annually in additional revenues.” But with the federal government poised at any moment to snuff out any legalized pot business, “the revenue and expenditure impacts of this measure are subject to significant uncertainty.”

Marijuana & Money: A CNBC Special Report

Marijuana & Money: A CNBC Special Report

Public opinion polls have delivered conflicting results on the initiative’s chances for success. “I think in November, (voters) will realize the consequences and devastation that this act will have on their communities, and I think the voters will turn it down,” says Chief Raney.

Richard Lee’s pro-Prop 19 group has hired an Internet fundraising company used during the Obama campaign, and its Facebook page has well over 130,000 fans. The political battle will be fierce, and opposition may come from unexpected sources. “Two groups that have come out against (Prop 19) are growers who don’t want to pay taxes,” he says, “and the cops who want to keep getting the forfeiture money and seizure money, and job security from it.”

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