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

http://latimesblogs.latimes.com/photos/uncategorized/2008/06/12/pot500.jpg

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)

So change the tax structure. If the projected tax revenue is not solely dependent on the cost of the item, then require some other annual fee to purchase. Or whatever- the bottom line is it is all a bonus when the State is looking for other sources of revenue. Not to mention the HUGE drop in spending on enforcement and prosecution of users and dealers of marijuana- billions have been spent to eradicate something that millions of Americans have tried and continue to use for a variety of reasons- and billions more have been spent putting these people behind bars when violent criminals go free and white collar criminals never even get caught. Legalizing pot will generate revenue, save scarce $$ for other law enforcement and contribute to economic growth. People who want to smoke pot can already get it, and people who have no desire to smoke aren't going to suddenly go out and light up b/c it would now be legal. most people choose not to smoke b/c they don't like the effects, not b/c they are afraid of getting caught. Lastly, potentially hundreds if not thousands of new jobs would be created (to cultivate, package, distribute, etc)- no different than all those jobs created when prohibition was ended and alcohol was once again declared legal. The forces fighting legalization? Drug (incl. beer/wine/liquor) companies, the prison industrial complex & esp. LAW enforcement- which would see their drug budgets cut.

I HOPE IT PASSES!

Why don't they cap the cost per oz. say $150 and tax it as they would liquor. Also treated as they do with cigarretes. Must be 18 or older to buy.
Who ever wants to buy & smoke pot, they will get either legally or illegally, so why not generate revenue like everything else that is taxed.
The goverment can't stop all the illigal pot that comes from other countries into the states, and they spend hundreds of millions of dollars trying to stop it from coming in. Why not save that money, and make money that is well needed for the country.

We sell liquor all over the states in markets, drug stores, restaurants, theme parks, and malls. It ruins the lifes of millions, not to mention how many people get kill while intoxicated, or get kill by drunk drivers.

When was the last time you heard of anyone killing or ruining their lifes while under the influence of marijuana?

If marijuana is used for medical resons, why not legallize it. Do we use alcohol for medical reasons? yet, it gets sold as if it's good for you.

It doesn't make any sence.

Legalize it!! Dont point your finger at me, dont ya know its YOU why you're suffering, you're why youre suffering. Ive got my mind set at ease, Don't you know it's you why you're suffering, you're why you're suffering.

Why don't they cap the cost per oz. say $150 and tax it as they would liquor. Also treated as they do with cigarretes. Must be 18 or older to buy.
Who ever wants to buy & smoke pot, they will get either legally or illegally, so why not generate revenue like everything else that is taxed.
The goverment can't stop all the illigal pot that comes from other countries into the states, and they spend hundreds of millions of dollars trying to stop it from coming in. Why not save that money, and make money that is well needed for the country.

We sell liquor all over the states in markets, drug stores, restaurants, theme parks, and malls. It ruins the lifes of millions, not to mention how many people get kill while intoxicated, or get kill by drunk drivers.

When was the last time you heard of anyone killing or ruining their lifes while under the influence of marijuana?

If marijuana is used for medical resons, why not legallize it. Do we use alcohol for medical reasons? yet, it gets sold as if it's good for you.

It doesn't make any sence.

Do it. Even with the 50 dollar tax it is still way cheaper and the benefits to the State are enormous. We are creating an above ground industry that will employ people and eliminate a large portion of the budget spent enforcing archaic laws. That money can be spent on serious, dangerous drugs. California needs to get on track and this would certainly help. Just do it right the first time, please.

"Other factors, such as the elimination of legal risks, could also increase usage between 5% and 50%."

So in other words they have no idea how much usage will increase.

and the problem is ?????

A win/win/win situation. Marijuana can retail at less than half it's present price, with profits for the state & everyone in the production/distribution chain. So logical and reasonable; let's hope it happens.

So are we more worried we will not get the tax, or that there might be additional users?

First, the silent decriminalization of Prostitution on Craigslist. Now, a possible legalization of Marijuana. I thought our government was founded on ethical democratic principles established by our forefathers, not Amsterdam. I guess the Illuminati's goals are well at work. We have to ask who is responsible for this?

If this passes, this will create mass drug addiction (to more potent drugs), more unemployment, and a potential further collapse of our economy as we know it.

The law needs to be changed to increase the amounts of signatures required to pass ridiculous propositions, such as this one.

We need to fight this proposition fiercely. We need to count every vote to ensure correctness.

God save us!

The pot shops are a rip off compared to buying on the street. They deserve a kick in the butt but they knew it all along, that they are just taking advantage of customers to fullest extent possible taking everyone for a damn fool and calling it the "market rate". When maximum efficiency is achieved they don't want to change it and government does not want to change it thus we keep serving less people for more and more money as time goes by. America is not out to serve/protect/help the majority, they lost since early year 2000 when all the hype started.

not counting the surfsce club stink like skunk water

not counting the ionic non ionic sopp smell

This report is all speculation and a lot of blind research. "researchers say this, researchers say that". Who are these researchers? What are their credentials? What studies did they do to show how much cannabis prices would fall? How do you know that people will try to evade taxes when the profit is already high? Are you trying to say that it is better to leave it illegal and give all the profits to gangs and drug cartels? This seems like a very poor attempt to show make prop 19 look bad.

The whole marijuana leads to harder drug use is bogus, and if anything legalization would fix it. Does smoking cigarettes lead to cocaine abuse? Does drinking alcohol lead to cocaine abuse? The only reason a marijuana user would be anywhere near cocaine is because they have to buy it on the black market, and often times drug dealers aren't discerning about which products they carry. There are some potheads who use marijuana plus whatever else, just as there are people who drink and do cocaine, or smoke cigarettes and shoot heroin.

"...the report said state tax revenues could range from $650 million to $1.49 billion."

"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.”

In other words, they have no idea.

The truth is, the war on drugs is a failure that has lasted over forty years, incarcerated hundreds of thousands of americans, and has not changed the street price of drugs by more than a few dollars. Prohibition does not work, and never will. Instead, it has created a vast police state that sucks tax money down a black hole. The definition of insanity is repeating the same thing over and over, and expecting different results.

Anything is better than the current policy. Just because I believe that though this thing won't pass. Isn't it weird that the city attorneys, law enforcement, medical marijuana profiteers and MS-13 finally have something in common - fighting the legalization of this drug so that they can all keep their horrible jobs. I mean seriously, isn't this just a microcosm of America today? Doing what's right for your wallet as opposed to what's right for the society as a whole? I can't believe what our city prioritizes now. A little girl dies of more gang violence on the 4th? Well let's just steer more money to busting medical marijuana patients rather than gang prevention or schools. I want to start over with a completely new government and none of the people I mentioned at the beginning of this post are invited.

Cheaper Cannabis?

More people choosing to smoke cannabis than drink alcohol?

Seems like a win-win situation to me!

$38 an ounce. You have to be kidding me. Just to manicure an ounce of finished product would cost $38 in wages. That's a joke. What about nutrient costs, soil, water, storage, transportation, packaging and all the labor involved. That price is hysterical.

Cheaper Cannabis?

More people choosing to smoke cannabis than drink alcohol?

Seems like a win-win situation to me!

This is all well and good, but you can't just suddenly start paying people less than half of what you have been, simply because the product you're selling is no longer illegal. If they want to keep the employees they've trained and trust they have to continue to pay them what they have been. And you can't fire them...that makes you a bad employer and a terrible person. How exactly do you figure they're supposed to pay their employees less? Those people are just suddenly out of a job, or have to make a huge amount of cutbacks and changes in their lifestyle, because "it's legal now"? It takes a lot of time and care to grow a good plant...you can't have poorly trained people doing it just because they work for cheap.

The prices are artificial and the weed stores are just a bunch of drug dealers who set up shop and try to appear respectable. How could their prices all be the same?
There should be quality control too and accountability of where it comes from. Just like anything you buy at any store: produce, food, beer etc. weed and the pot edibles should have an address and who made it. Just like any product.
Right now you buy an edible from the weed shop and if it makes you sick there is no one to go after. After a few bad edible experiences I learned to stay away from a product that has no origin except the retail place where you bought it. No accountability of quality or what and how much is even in it.

I would be more than happy to pay a $50 tax on top of a $38 ounce. $88 an ounce I hope it passes.

tell you one thing....over tax it and i will still buy it off the streets for sure...dont beleive me government? try me..it WILL be legalized this year...try to imposed an unfair tax and ur plan for regulation will backfire as far as taxes go. besides imma be growin my own anyway and wont need to buy it from the government...people dont buy governmnt sanctioned weed..there wont be thc in it. buy it from private owned dispenseriesor grow your own

 
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