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

[virg]

no profit, no violence. Plain and simple. By reducing the cost of marijuana, you stop funding the criminal element. We saw that happen when Alcohol prohibition was revoked with the 21st amendment.

[Richard]

Of course the price will drop.
The reality is, since it's a weed, many users will now grow what they need at
home. The price will need to drop to give those people a reason to not get it
that way. Not many people grow their own tobacco, now do they.

Will more people use?
I believe it likely that at least more people will try it since the law acts as a
deterrent to at least some potential users.

Is it a gate way drug?
It is my belief that the fact that the drug is illegal and forces consumers to
associate with people committing illegal acts that in turn exposes them to
opportunities for additional illegal behavior.

In any case, Pot should be treated like alcohol, at a minimum.
Have it licensed for sale and keep it away from minors.
Public intoxication and consumption must be forbidden.
Anything using it as an ingredient must be clearly labeled and controlled.
Driving under the influence will, of course, need to be forbidden.

[timehascometoday]

it is time to end this stupid prohibition which fuels cartels and gangs and wastes millions if not billions of tax dollars to pretend law enforcment is doing something, they need thier time for much more dangerous concerns not potheads,in our neighborhood the cops could careless anymore they are more concerned about guns that is good. the whole prohibition was based on lies promoted by dupont back in the 30's so they could replace the hemp market with synthetic fibers that pollute and also the pharma industrial complex doesnt want you to destress for free when they can write you a presciption for poison who's side effects are much worse than what it treats, with pot no hang over,no liver damage maybe you eat alot of pizza and hogendoss thats a boon for them and the hemp fiber could save america again - let have the gutz to do it now yes on 19 i say

[Steve Martin]

People who use pot don't move into harder drugs, give me a break. If you are a pot user and you move into harder drugs it has nothing to do with the use of pot but more to do with the level of instability and emotional dislocation factors. A criminal does not move from robbing bystanders to robbing banks becasue he robbed a bystander, he robs becasue he is dislocated from society based on socioeconomic factors as well as his mental state casued by the lack of support other then support while being beat half to death or shot for no reason , by America's finest. or while starving to death on the streets of LA because we have no compassion in general..

[Jim smith]

I can tell you right that any drop in price is not going to increase usage. It's so readily available on the black market that you will likely see no increase, or very little in the number of folks using it. Plus, you can only smoke so much at one time, so the decrease in price has little to do with the volume of use. Regulators should understand this.

Not only will the tax revenue be of great help, the decrease in prices will just put more money back in folks pockets for spending. With the millions of users that use, the decrease in price will really affect the users budget(if it truly does decrease by that much)and can free up thousands of dollars per year for use back in a persons budget.

[dan smoot]

Rand is wrong. No One, not a single soul is going to start smoking grass just because it becomes legal. Do a survey or just use logic.

[E. Frandou]

"could also increase usage between 5% and 50%"

A real journalist should always add that with such statistically meaningless odds, the real point made here is political.

E.F.

[jeff]

there is no way cannabis prices will drop that significantly. i have been growing cannabis legally in california for 8 years. the prices for nutrients, power, soil, and all the other expenses related to cannabis cultivation are not going to drop. it is expensive and time consuming to grow good cannabis, i cant see prices going less than 250 per ounce and that is a stretch. anything less would make it not worth doing.

[Michael]

It will not surprise me if, one day, we look back and see that legalizing marijuana was the turning point in our state's economy. I won't say which way it turns, of course.

[mike honkoski]

sure

[Ibrewer69]

I think it is a great idea to sell marijuana legally. Hopefully it will cut the importation from Mexico as well as the crime associated with this criminal activity. There will be less cost to taxpayers due to incarcerated individuals for their use and distribution of the currently illegal drug, and it will bring in desperately needed revenue to California instead of the cartels and hudlooms who currently benefit from sales without paying taxes.

Hopefully, the users will be responsible when smoking Marijuana and will take all the precautions normally taken by law abiding citizens when using alcohol. Of course, there will be those who misuse it and get into trouble because of it, but these people would have broken the law anyway whether the plant was legal or not.

[Yo mama]

A $50 tax on an Ounce will not decrease use or increase illegal substitues. The cost of the Ounce dropping from $450 to $38 makes the $50 sin tax virtually irelevant to anyone who smokes Marijuana.

[Alex]

Wow no comments yet on this huh?

I'm not sure that idealists would be very upset. I smoke cigs, and I figure if the price of a pack of smokes is $5.50, and someone brought it down to $1.00, with $0.50 of that going to taxes? I would NOT have a problem with that at all.

SO it costs $300 mil to enforce the laws....

and it would generate $300 - $1.9 billion? That sounds like at least a $600 million dollar swing in our favor right? What's wrong with this picture?

I think that this finally happens. Wow, what an age we live in.

[mike honkoski]

sure because it's like every day that the newspapers are full of those stories " Another family killed by another marajuana driver, give me a break, I've never even heard of it happening. Drugged drivers get real. Moreover anymore when a person is pulled over and the police find a bag of pot on you or in the car your driving they will pat you on the back thankfull that, thats all your on. Then tell you see you later or go buy a pizza. The return comment will go something like.....How did you know I was going to pick one up? Yes those marajuana smokers out there, boy aren't they one bunch of hardened criminals. I smoked for at least ten years but have not now in some, i believe elleven years now. In any event leagalize the stuf, big deal.

[bill]

The opposition will always find excuses on why we shouldnt legalize marijuana, only because their fat cat partners could loose lots of money due to the profits they receive presently due to it being currently illegal,
lets say if it does lead to increased consumption and or a select few dabbling into other illegal substances, either increase fines for those other substances and deal with when you cross that bridge

[James Jackson]

That "pot prices could fall" is a maybe, that taxes on pot will rise is a certainty. California will be on its way out of debt.

[randy]

Now that we have an understanding about the marijuana issue and the money the state can make on it.
Next on the agenda, is prostitution. We need to legalize it, so that we can cut down on sex crimes, and get more womem or men off their butts and onto their backs and money to be made for the state and the local economy.
This can be done, if we just get our puritian issues put aside. Less rapes, child molestations, priest will have a place to go, fathers and mothers who are unhappy will save their marriages. It is a win win for everyone.
Coming up on ballot prop 69, this fall.

[Ron]

Why do we stand for our politicians treating the means to increase drug use as a tax revenue generator? This group has lost sight of the important areas of public protection. Now, if I want to watch some sort of television programming that they don't approve of...well, they're there to save me from myself right away. Disgusting. Time for them to go.

[Curtis]

We Californians need to lead the nation in legalizing completely the marajuana industry.
It is simply rediclulous that cigarettes are still legal, when they are proven to be the cause of over 400,000 deaths here in the U.S. alone. Millions worldwide!
Yet the liquor and pharmaceutical lobbying groups will spend millions to keep things just the way they are.
Because hey, just follow the money of those industries, and they stand to lose billions if poor old Mary Jane is legalized. Wouldn't that be a cryin shame?
Legalize it, tax it, enjoy it!

[REA]

$38.00 for an ounce of O.G. Kush!!!??? What are those people at Rand doing, smoking pot?

[winged]

Yeah, just what we need...the right to legally drive around smoking pot....like we don't have enough problems with people under the influence. Why would we need to increase the number???

Please vote no, the life you save may be your own, or your child's.

[BackdoorJesus]

When reading that there will be "more marijuana consumption", stay mindful of the fact that this really means "more ADMITTED marijuana consumption". Most people that use it now don't talk about it due to its illegal status.

That's not to say that there won't statistically be more people who will consider it as an alternative to alcohol once it is legal...but as such, in considering it an "alternative" to alcohol, I would also expect alcohol consumption to decrease as a result of this bill's passage.

Sounds like a good thing to me.

[Mike G.]

Folks think that the opposition to marijuana legalization are church groups and anti drug organizations, but, in fact, it's the current illegal growers who know that their gravy train is about to come to a screeching halt.

[Jon K.]

We need the tax dollars. Legalization also leads to a legal age for consumption. I don't smoke. I know people who do. They don't engage in destructive behavior when they're on it.

It seems like a no-brainer to me. Legalization basically results in less crime and more tax resources. It's a common sense solution.

[Jon K.]

Tax the hippies! I'm all for it.