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

[mateo]

That's a good point, if the state and counties tax it too much (10 times the rate of tobacco!), they undercut one of the key advantages of decriminalization, which is removing the incentive for smugglers and drug lords. Not to mention it'll further devastate the struggling economies of counties like Humboldt, Mendocino, etc.

Too bad they still can't treat it sanely like alcohol or tobacco, instead of getting so greedy...

[C Lawton]

When Rand pays for a study it usually comes to the conclusion Rand wanted before the study or research was conducted.

[Paul]

Vote no on Prop 19. With all of the uncertainties laid out by the Rand report, and with likely increase in pot use by teenagers, this initiative is a very bad idea. California would wind up getting more intoxicated people everywhere. The supposed tax revenue windfall would never materialize - the pot sellers will just evade taxes, like they have evaded many laws in the past. Once more, this is a special-interest ballot initiative centered around money - the pot dealers want more customers. The people of California will have to pay the costs, while the Pot Lobby reaps a fortune.

[Jose C.]

I think consumption would increase temporarily. Once the excitement wears off (no pun intended), people will go back to their miserable lives without weed.

[D.Salas]

This is crazy that they legalize drugs on the streets of California. Whats next are we going to allow anyone to carry a gun or make drunk driving legal? I dont care how you look at it Pot is a drug and so many people buy these fake pot licnesed and pay Dr.s for them and all it does is make it okay to have drugs in there homes and on them even if there are kids living in the home. No wonder we have so many problems with drug smugglers. I have to worry about even sending my kids to school now a days kids are doing drugs in elementary and half of them are learning it from home. This makes me sick!!! Yes, if you have cancer then its should be okay for the pain however no one I know has cancer but they sure have plenty of excusses as to why they have to have the licnese. Its sad. So much for teaching our youth about "Just say no to drugs"

[ArmandoG.]

ROLL IT UP, LIGHT IT UP, SMOKE IT UP, INHALE, EXHALE!!

[Mike Rotch]

Im sure the $38 ounces are going to be top quality stuff.

An oz of good cannabis will always demand a good price.

[Derek]

Cheaper would mean less profit for the drug cartels that make billions of dollars on the illegal trade, which would also erase a lot of the crime along the border.

People seriously can't learn from the history of Prohibition.

[Harry Kushna]

The big thinkers at Rand are 100% incorrect about the assumed new prices for pot. For one thing, when pot became legal in Amsterdam prices went up, so did quality. Secondly it costs more than $38 and once to grow, if you're talking about medical grade pot. Mexican dirt weed.. yes $ 38 an oz.
Please don't forget that this is the same Rand Corp. that got us into Viet Nam.

[Mike Rotch]

The people that want to smoke cannabis in this state are allready doing so. Very few people would"start" to smoke if it were made legal. Newsflash......it is allready legal.

And it is laughable to think an ounce of good cannabis will ever go for $38. THere will always be a demand for a higher grade of product in this world, it does not matter food,cars...weed. The good stuff will always command a high price.

[Ezra Sugar]

The real benefit to the passage of prop 19 will be the removal of the criminal enterprises from the marketplace. This is where we should remain focused. This represents the greatest danger of illicit drugs. It also represents the greatest cost to society in the form of violent crime, court and imprisonment expenses. Someone thought that there would be a significant increase in "smoking and driving." even if thats the case it wont be as bad as the drunk driving problem. Drunks are far more dangerous. People driving tired, distracted, or texting represent a far greater hazard, anyway.

[Dexter Peabody]

The violence? It's the money.
The corruption? It's the money.
Supply-and-demand works with weed as with everything else, but with the distortion of illegality.

[Kate]

80%? Sounds like the folks who compiled this report have been smoking a bit of their own, actually.

[Ruby]

November november cant wait!!! Its been going on years & years and its not going to stop...Its worth the $$$...WE all need money! it goes around both ways.Alcohol Has soooooooooo Many side-afects."and drunk driveing please" Who says money dont grow on Trees? What........

[HiVeloCT]

A few things come to mind. First of all, if the price does drop that provides a perfect opportunity to tax consumption as we do with alcohol. That would mitigate any increase in consumption while providing a new source of revenue for CA exactly when it's needed. I seriously doubt that the GOP members of the legislature would block this "new tax".
In addition, prices would likely vary depending upon quality, as is the case with premium liquor.

Finally, pricing might be moot, as the initiative allows for individuals to grow their own in areas of up to 25 sq. ft. I foresee a whole bunch of "micro-growers" setting up to produce exotic strains and selling them at premium prices.

[Chas]

I believe we have to pass this bill and get on with our lives. Not everyone is meant to be sober all of the time. People need to mind their own business when it comes to others consumptions, we do still live in the land of the free right! If those that don't like maybe they should be the ones leaving....

[Cali Gorized]

I'm for it as I consume weed for my anxiety and headaches. 38 dollars an ounce will bring more consumers, more money and more then likely tourists. Yes on 19!

[Potamoker]

Don't drink and drive get high and fly!

[The Reality Check]

Please, this article is ridiculous. Legalization will only do the following:

Lower crime (as the need to arrest dealers will be eliminated.

Lower Jail populations (please see above)

Bring Tax revenue to the state

Improve the product

I do not believe for a minute that the price will go down and usage will go up, this is just scare tactics used by whoever wrote this article to manipulate un-informed third parties to serve their own interest.

Get over it, legalize it and move on, save the state money, get some revenue for what is already going on in your own back yard. Unclog the court systems.

Eliminate to co-op's and get the product on regular store shelves like liquor and cigarettes.

[Rick Martini]

I don't understand the research from this think tank. If you don't smoke it now, I doubt that you'll start smoking it, once it's taxed and regulated.
Legallize it! If we don't get enough taxes from it, repeal it! or let the
Drug Cartels have it back and tax them!

Simply, I'm more worried about alcoholic drunk drivers and prescription
pill user's than some mellow pot smoker!

[Chris]

Is there anything that is not consumed more when the price goes down??? Anything at all???

[Galaxy420*]

YES YES YES on Prop 19.

Growing up, I remember DARE class as a kid. All the lies, lies, and more lies they would tell children. "If you smoke 2 different types of marijuana you will die". that was the best quote I heard when I was a kid; and then to my disbelief, I and my friends tried smoking numerous strains and guess what? WE are still ALIVE. So, propaganda, it is what certain people/groups/organizations lie about in order to get their way. Well no more.

MARIJUANA IS A PLANT. A PLANT. IT GROWS FROM A SEED IN THE GROUND. IT IS NATURAL. IT IS ORGANIC. IT IS NOT HARMFUL AND HAS NUMEROUS HEALTH BENEFITS.

I wish DARE would teach kids the truth like above. It is sad that they lie to children and tell them that other substances like alcohol, are safe when of 'age'. Really we need to tell kids, "Marijuana is a safer substance than Alcohol, tobacco, prescription pills and guns." That is the truth and that is what we need to teach the kids. Say "NO" to cigs, booze, guns and pills, and say "YES" to marijuana, a plant that is really a MIRACLE

[Cmoon]

I agree with Charles J, crime would drop. We would be taking the power and money away from criminals, why would this be a bad idea?

[Michael]

I read the report. It prefaces itself with a disclaimer, that basically states its facts and figures are presumed and inaccurate. But hey you got your nifty story and headline LA TIMES.

[Wake up, California!]

I've been sober for over 1 year after being imprisoned by marijuana's deception.

How could have 433,000 initiative signatures caused such a ridiculous proposition on the ballot? Maybe we should get another 433,000 signatures to legalize meth too! Or maybe we could also legalize prostitution...oooppss...I forgot. Craigslist seems to have already done that,

This is California! Not Amsterdam, you idiot stoners! Who the hell are you people anyways? You're destroying our country! Thanks alot!