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Prop. 19 approval could decrease marijuana costs, increase consumption, report says


The cost of marijuana would drop as much as 80% and consumption would rise if Californians vote for Proposition 19, the legalization measure on the November ballot, researchers at Rand’s Drug Policy Research Center have concluded in a detailed analysis of the issue.

The Santa Monica-based, nonprofit research institute predicted the cost of marijuana, which runs between $300 and $450 per ounce, could plunge to about $38 by eliminating the expense of compensating suppliers for the challenges of operating in the black market.

The researchers were not certain how much that decline in price might spur use, but noted that one typical estimate is that a 10% drop in price increases use by about 3%. Other factors, such as the elimination of legal risks, could also increase usage between 5% and 50%.

The report noted that it was impossible to predict tax revenues from the initiative, which leaves that decision up to individual cities and counties. Based on a statewide $50 per ounce tax proposed in a legalization bill introduced by Sen. Tom Ammiano (D-San Francisco), the report said state tax revenues could range from $650 million to $1.49 billion.

“California voters and legislators face considerable uncertainty because it is very difficult to estimate how much more marijuana will be consumed in the state or how the change will affect tax revenues, criminal-justice costs and healthcare costs,” the study concludes. The 54-page report, with 14 pages of footnotes, is called “Altered State?” and was paid for by Rand.

The researchers noted that projections for marijuana use and tax revenues hinge on estimates of use, prices, how use changes with price, taxes imposed and evaded, and numerous other factors. The report is peppered with caveats about the assumptions researchers had to make.

To calculate the price drop, researchers looked at the cost of growing marijuana in a 1,500-square-foot house. The researchers concluded that the wages paid to employees who tend the crop would slip from as much as $25 per hour to no more than $10, just a little above what nursery laborers earn. They also suggested growers would have easier access to labor-saving automation, savings from growing on a larger scale and minimal risk of arrest and forfeiture.

If the per-ounce cost dropped to $38 and the Ammiano bill’s $50 per ounce excise tax passed, taxes would account for more than half the cost of the state’s marijuana, an observation likely to inflame marijuana idealists who see it as a natural weed that ought to be treated like an herb.

The report notes that Ammiano’s proposed tax is about 10 times the rate of state tobacco taxes. That high tax creates an incentive for tax evasion that is more financially rewarding than smuggling marijuana from Mexico to California and it could also encourage smokers to turn to the highest-potency marijuana to get more bang for their buck, the researchers concluded.

Researchers also looked at the estimates of the cost of enforcing marijuana laws in California, which ranged from $200 million to $1.9 billion, and put it at “probably less than $300 million.” They also conclude that it is not possible to determine whether increased use would lead to more drugged driving accidents and to more use of harder drugs, such as cocaine, saying the research is inconclusive.

-- John Hoeffel

Photo: L.A. Times file

Comments () | Archives (186)

Perhaps the Mexican Drug Cartels need to take make large media buys for No on 19?

it COULD increase consumption? Was this question asked when alcohol prohibition was repealed?

If consumption is increased, perhaps we will have less volatile people in this world!

Well & good - and the crime rate would drop by around 100%.

I dont smoke pot but I am sick of paying tax money to put people in jail and enforce this useless ineffective war on drugs. It it time for a different approach (generate revenues, and redirect existing enforcement dollars into treatment)

More scare tactics, John?

most people dont want to be stupid!

I believe it would solve a lot of problems just like when prohibition ended over alcohol. Better because we now have a structure to support its regulation. It will also free law enforcement to go after violent crime and more serious offenses.

Wake up America. the government is using fear to screw you. how was it possible for someone to make a plant. that grows naturally, illegal? and yet all of those drunk a-holes who run over little kids or pedestrians. and the awesome police chief who uses a city issued police cars to drive down 5 miles on his tire rims. when are people going to finally stand up for themselves?

Legalize weed, Make it cheaper!!!!
that should be their slogan for prop 19!!!

I was going to comment, but I can't remember what I wanted to say. It'll come back to me.

That when the State runs out of money. Legalize marijuana for the State benefit.

That when the State runs out of money. Legalize marijuana for the State benefit.

How about a link to this "detailed analysis" John.......

yah..if it passes im sure more people would smoke weed... but not in an alarming number.... most people who would smoke weed legally will probably do it illegally aswell.

So..... legalizing will make an OZ drop to about $100, even after taxes. PERFECT!!!!
The state will get a HUGE financial boost from the taxes, marijuana users will be able to afford their meds without going broke, and crime will drop dramatically! I say this because criminals who are recreational users will be more likely to light up and get stoned than go out and exert themselves with criminal activity.

Oh my gosh, this is the most humorous things I have read since Erma Bombeck passed away!
The greed of politicians salivating as they calculate astronomical tax revenue from a product that has not even been legalized yet is funny! Almost as funny as the plethora of folks who have presented uproarious examples of how you can misuse statistics to illustrate your point. This group of people are undoubtedly closet smokers because they could not come up with this stuff sober.
And of course, no article on marijuana legalization would be complete without the dire warnings of it's being a "gateway" drug and the increase in "drugged driving" incidents. Oh call me an ambulance, I can hardly breathe I am laughing so hard!

Using my HP calculator, I predict once growing marijuana is legal, it will basically be free. It will be legal to grow more pot in your home, than any one person could possibly smoke in a year. People will use it to barter or bring it as gifts to parties. There will be no more smuggling because there will be a giant skunky glut of weed every where!

The cost of product will go down. The use of it probably will not go up as smoking has a huge marketing disad and it is all over the tv all the time. Along with that the actuallity of it going up is small. More or less it will just be people who where underground being able to stop lying about their recreation. Personnally I do not do it. However, I have done reports on it since I was very young, as I see the whole thing as a plus. I mean compare the product to alcohol. It will have the same affects that prohibition had on alcohol. The analogy is that crime will go down, costs of the Executive branch will go down. Cross boarder drug production will go down. US taxes will go up. Whole cities will start becoming legitimate places for business, and farming. Along with that the actual my favorite the plant itself much like Soy bean will become a staple for thousands of other industries. It will also substitute some very important mattters. Currently the laws to grow it for other industries are to hard. If the bi product was legalized after the Hursts family mass media propoganda against it because of a certain reason, I believe we will see huge advances in certain areas other than medicine. Along with that our technological advances in certain things will go up. Notice I am not saying what those advances are, that is because, well, like I said I have been studying it since I was a kid. Have you ever felt the bark of that plant. MMMM it has industry written all over it.
Further, it is as easy as alcohol to reguale. There are breathers that can be used to check toxicity, along with tons of research at what exact level is save and when the affects wear off much like alcohol.

"The researchers concluded that the wages paid to employees who tend the crop would slip from as much as $25 per hour to no more than $10..."

Yup. $25.00 for Julio tending the plants illegally in our national forests as opposed to Charlie doing the same in a legal pot farm--of course. These "researchers" seem to be in the pockets of the cartels who are now screaming, "Unfair. How could they do this to us!!"

Marijuana use will rise because people will be allowed to have an alternative to Alcohol to get a "Buzz".

The price will decrease because the price is capped for the black market.

It's a bummer that this study is going to give ammo to those who oppose legalization come election time. You bet we'll see commercials saying "Prop 19 will increase marijuana usage up to 50%.. protect our children.." bla bla bla. Hopefully the tax revenue (and basic logic) will be enough to convince the majority of voters to vote YES ON 19.


Who cares if the price drop or if people smoke more. The bottom line is it will generate revenue and reduce legal costs and prison costs.

Its a not a gateway drug, any more the booze is.

How much crime would be eliminated by leagalizing it?

Yet, another study aimed to scare us into not legalizing marijuana. Did RAND calculate the savings in court costs, police time enforcing eradication. The lessening of illegal drug traffic from Mexico. Mexico's largest drug crop is Marijuana. The Federal government spent 15 Bil dollars eradicating Marijuana, last year. How bout we as Californians lead the way to ending the most oppressive and racist laws on the books since the Jim Crow days. Save money on crime and border issues, and prisons which are already overcrowded and underfunded at a great cost to our educational system. People can legally go to liquor store and buy Vodka pound a whole bottle get behind the wheel and kill. They may do the same with Marijuana, chances are they wont. I urge all voters in California, to think about how they would like to spend their tax dollars. On prisons and police? Or on Schools and Educators?

How exactly are they taxing marijuana? Couldn't somebody still go to the street corner and buy marijuana from a dealer and skip the tax but get if for cheaper? Couldn't the drug lords still import marijuana and give it out cheaper than people growing the plants in California?

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