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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)

This newspaper seems very much connected to the problem. They often report the POV of the police who have a material interest in keeping things illegal. Go figure.

woooo 38 dolla oz!!

If these are the worst predictions, it is far, far better than the millions of dollars simply wasted--not to mention the loss of human capital--by criminalizing and incarcerating people for a non-violent offense. It is far, far better than the ravages of gang violence in our cities which is supported by the illegal trade in drugs. And it is far, far better than the relentless destruction of our neighbor to the south, Mexico, whose innocent citizens pay the price while cartels make billions.

Drugs are here to stay: 40 years of the War on Drugs has at least proven that much. We have the opportunity to reduce crime while redirecting billions of dollars of our money away from terrorists and put it to use here in the USA. Let's not blow this!

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

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

Posted by: Wake up, California! | July 07, 2010 at 06:44 PM"

Oh, OK there. You had your fun...you have a weak mind....likely imprisoned by something else...and you are going to force your "morals" onto others.

Trutanich...is that you?

Oh, OK there. You had your fun...you have a weak mind....likely imprisoned by something else...and you are going to force your "morals" onto others.

Trutanich...is that you?

Posted by: LA_Observer | July 07, 2010 at 08:23 PM

All we need is another 433,000 signatures, and we can force all the dispensaries to shut down permanently. I think that would be an easy task.

And you talk about morals? I don't want my little brother and sister experimenting with marijuana, then getting bored and burnt-out, and then experimenting with other drugs, such as easy accessible meth. Anyone who smokes marijuana is usually associated with other drug-addicts.

You are so high! What are you? A total idiot?


RAND Corporation Board of Trustees
List updated May 2010

Paul G. Kaminski (Chairman), Chairman and Chief Executive Officer, Technovation, Inc.; Former U.S. Under Secretary of Defense for Acquisition and Technology

Philip Lader (Vice Chairman), Chairman, The WPP Group; Former U.S. Ambassador to the Court of St. James's

Barbara Barrett, President and Chief Executive Officer, Triple Creek Ranch; Former U.S. Ambassador to Finland

Richard J. Danzig, Chairman, Center for a New American Security; Former U.S. Secretary of the Navy

Francis Fukuyama, Bernard L. Schwartz Professor of International Political Economy, Paul H. Nitze School of Advanced International Studies, Johns Hopkins University

Richard Gephardt, President and Chief Executive Officer, Gephardt Group Government Affairs; Former U.S. Congressman

John W. Handy, Vice Chairman, American Shipping and Logistics Group; General, United States Air Force, Retired

Lydia H. Kennard, Former Executive Director, Los Angeles World Airports

Ann McLaughlin Korologos, Chairman Emeritus, The Aspen Institute; Former U.S. Secretary of Labor

Peter Lowy, Chief Executive Officer, Westfield, LLC

Michael Lynton, Chairman and Chief Executive Officer, Sony Pictures Entertainment

Ronald L. Olson, Partner, Munger, Tolles & Olson LLP

Paul H. O'Neill, Former U.S. Secretary of the Treasury

Michael K. Powell, Former Chairman, Federal Communications Commission; Senior Advisor, Providence Equity Capital; Chairman, MK Powell Group

Donald B. Rice, President and Chief Executive Officer, Agensys, Inc.; Former U.S. Secretary of the Air Force

James E. Rohr, Chairman and Chief Executive Officer, The PNC Financial Services Group

Hector Ruiz, Former Chairman, GLOBALFOUNDRIES; Former Chairman and Chief Executive Officer, Advanced Micro Devices, Inc.

Carlos Slim Helú, Honorary Life Chairman, Grupo CARSO, S. A. de C.V.

Donald Tang, Chief Executive Officer and Founder, CITIC Securities International Partners Group (CSIP Group)

James A. Thomson, President and Chief Executive Officer, RAND Corporation

Robert C. Wright, Former Vice Chairman, General Electric; Former Chairman and Chief Executive Officer, NBC Universal; Chairman and Cofounder, Autism Speaks; Senior Advisor, Lee Capital

Trustees Emeriti

Harold Brown, Counselor, Center for Strategic and International Studies; Former U.S. Secretary of Defense

Frank C. Carlucci, Chairman Emeritus, The Carlyle Group; Former U.S. Secretary of Defense


Do you really trust their research?????????

Reverse psychology I believe is the term !

So,said the flock!! (Rand )

i cant wait for election day

There isn't a need for this law, especially in California. Anyone over 21 who wants to buy it legal can just pay a doctor to get a medical marijuana card. There should be SOME difficulty built in to get this drug.

It's obvious the problems this law will create, and California isn't going to get paid for it. The taxes will be so high that people would just buy it off the street, and there would now be no problem with possesion, so people will be selling it with impunity. There will be a flood of it on the market, and it won't be taxed. And there will probably be a huge increase in demand, and more illegals will come to Cali with backpacks of weed that they can fund their stay while they wait for their welfare application to be processed.

Think about it people, do you want to put your money in Jose's pocket or Jeffs pocket.Think about it people!!

Why doesn't anyone ever wonder how the "War on Drugs" can be lost for so long to a bunch of stoned people?

Maybe 'cause there's a whole lotta $ to be made by some folks by keeping things illegal?

Reading these comments make me support not legalizing marijuana. There are a lot of not very smart people in this state.

First, if you legalize pot, it doesn't mean the money spent on drug enforcement goes away. You still have illegal drugs so you can't just add the money that is used to enforce laws to the money you will save.

Second, sure marijuana is a plant but so is coca plant which cocaine comes from. Should cocaine be legalized too?

Third, the reason marijuana is a gateway drug is not because you WANT to do a harsher drug, but because you hang around people that do other drugs. They say do you want to try this, and since your brain is all messed up you say sure and now you are hooked on some other drug. I have watched my former brother-in-law go from being a pot head to a guy smoking an 8-ball, to a low level pot dealer, to a drug dealer convicted by the federal government. He used every type of drug that was given to him just to see what the effects are. Was he an idiot, absolutely just like a lot of other pot heads. Just because you don't think you are an idiot doesn't mean you aren't one. I'm sure Sarah Palin and Dan Quayle thought they were smart also, but the truth hurts.

We need to legalize it, tax it and (continue to) enjoy it. The world would be a much better place if everyone had a nice buzz and became more mellow.

I don't smoke week but I can see all of the benefits of legalization. I'ts right out in front of you Californians!!
Those who are against it are in denial and are afraid of change.
I've read every single comment on this board and I believe there were two or three who are against legalization.
That says it all.
come November, I believe based on what I've read and heard from the masses that this proposition will pass and we will all be in for a new and intersting experience.

this is the most ridiculous story i have ever read on this subject. since when did legalizing alcohol make alcohol any better? have you heard of all the domestic violence and drunk drivings that have injured or killed people due to alcohol?? as for marijuana being a gateway drug to cocaine and all the other lies you spewed in your story, i say bullcrap! i have been a marijuana user,eating edibles for a long time now and guess what? i have never used cocaine or meth nor do i or will i ever have the desire. i am 47 and have never had a dui! why? because i don't abuse the alcohol that people think is okay because it is legal. your scare tactics in your story here are ridiculous, and i hope and pray voters don't fall for it as they did the 3 strikes law that has been abused since it was voted in.

You know marijuana should not be taxed in the first place, its just a herb and is natural. Legalising it and taxing it may not work out either since you can still grow it through non-official channels and if you in say California you probably got all the best conditions to produce the best pot which will led to a new business strategy especially for cannabis brokers and that is exporting to grade marijuana around the world.

I say legalise pot and dont tax it - this will almost certainly remove any business from the likes of Mexican drug lords.

The "hay" that would be produced would ultimatly lower consumtion
no grower would invest in the cultivation, as they do currently.less groweres would participate... Causing another black market for good quality... No on prop 19!!!

I just hope all those is favor of this proposition remember to go out and vote

Are people actually buying this??? what is it about marijuana that scares so much of you out there?????
Marijuana is NOT like meth, Marijuana is NOT like alcohol, Marijuana is NOT like tabacco. It is harmless. The worst that can happen over an extended period of time is you start to forget things. IT doesn't kill you! It doesn't make you an addict! It doesn't make you drive and crash into innocent people like drunk drivers. It doesn't create violence like most drugs do. You smoke to alliviate your pains. What is so wrong with that??

This so called "study" (and lets not even look into who funded this "study") only paints yet another negative picture of something that IS MEDICINAL!

Instead of popping pills that COST a lot and are most likely ADDICTING and have HORRIBLE SIDE EFFECTS, people should have the RIGHT to smoke pot.

People should REALLY do their research before giving into these bias "studies".

Blah Blah Blah

Legal in portugal

Lower consumption in portugal


Leg in Cali

Increased consumption in Cali

The anti-marijuana lobby knows no logic

I am a smoker and I hope that if it does become legalized that it isn't done in a manner in which full blown business can profit unless it is from the textile business aspect. In fact I hope quite the opposite happens. The more responsible and reasonable method would be to allow the people who consume it to grow a set amount. The user would need to buy a license and personal consumption could only take place in the privacy of your home.
It would need to be made illegal to carry more than a small amount perhaps no more than 3 1/2 grams. Medical despensaries could only sell to medical patients. Seeds could be sold to general public. Make it illegal to sell clones or plants. Let the users yearly license fee's help our tax burdens lets not give any one person, big business, and big drug cartels the ability to become rich from the sale and manufacturing of the drug.
Make the drug legal but dont make it so incredibally easy to obtain. Some would argue that if you can grow it it doesnt become any easier but I strongly disagree. Buying it from somebody else would have to be illegal to make money from it would have to be illegal unless selling waste and material used in the textile business.
By making it legal to grow your own but illegal to make a profit from it would be the best way to go with this law.

its gonna be funny watching the commercials of the nay sayers. i bet the owners of the dispensaries will work together to make a yes commercial

Price drop? Consumpti0n up? Are those bad things?

I have got a good idea. How about we make marijuana legal and cigarettes illegal?

ok. where are they getting all of this mary j to sell at 38 bucks ??? thats gonna run out mad fast man~~

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