Legalization of Marijuana: What Could Happen?

Tom Ammiano’s bill has been modified and I haven’t found the State Board of Equalization’s analysis of it.  However, much of the analysis of his older bill still holds true. Here are some excerpts I found interesting.

According to the report titled Marijuana Production in the United States (2006), an estimated 22.3 million pounds of marijuana was grown in the U.S. in 2006 with a value of $35.8 billion. California was the top producing state; it produced 8.6 million pounds with a value of $13.8 billion. The report also discusses that, although most marijuana is produced for local, in-state use, California is considered an export state in which marijuana is produced for both in-state use and export to other states. Our literature review indicates that estimated consumption of marijuana in California amounts to one million pounds per year, or 16 million ounces.

Legalization of marijuana would cause its street price to decline by 50 percent.

• This 50 percent decline in price would lead to additional consumption of 40 percent.

• The imposition of the $50/ounce tax would then lead to reduced consumption of 11 percent.

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Hattip Sacbee

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28 comments

  • Great photo. I see it’s time to harvest that beauty. The yellow leaf backdrop is a nice contrast to the vibrant bud glistening with….

  • Great photo. I see it’s time to harvest that beauty. The yellow leaf backdrop is a nice contrast to the vibrant bud glistening with….

  • I had to lookup prices per ounce here: http://www.drugscience.org/Archive/bcr4/Table10.html

    @ 2003 prices of $200/oz, the math above settles the price @ about $150/oz. Instead of just a $50/oz tax, use a $100/oz tax — keeping the price about the same and generating 7B in new tax revenue (approximately 1/3 of the current deficit).

    • You really can’t impose such a high tax on a plan that any knucklehead can easily grow. If beer were $100 an ounce, everyone and their brother would be a home brewer.

      Legalize it to stop wasting money on law enforcement and housing nonviolent prisoners.

      • I agree. I don’t think Californian’s should turn to legalization to pull us through economic hard times. People can speculate all they want, buy they don’t really know what kind of taxes this will generate. We should legalize for the RIGHT reasons, not just because money is wasted on law enforcement and nonviolent offenders, but because LIVES are wasted this way. Free the herb. Free the people.
        Free the farmers! The greatest benefit, that I don’t hear anyone talking about, is that farmers could grow hemp! Hemp is huge cash crop. It doesn’t require synthetic pesticides or fertilizers; and we can make everything from food to fuel to fiber with it. Hemp is a miracle and it needs to be free.

  • I had to lookup prices per ounce here: http://www.drugscience.org/Archive/bcr4/Table10.html

    @ 2003 prices of $200/oz, the math above settles the price @ about $150/oz. Instead of just a $50/oz tax, use a $100/oz tax — keeping the price about the same and generating 7B in new tax revenue (approximately 1/3 of the current deficit).

    • You really can’t impose such a high tax on a plan that any knucklehead can easily grow. If beer were $100 an ounce, everyone and their brother would be a home brewer.

      Legalize it to stop wasting money on law enforcement and housing nonviolent prisoners.

      • I agree. I don’t think Californian’s should turn to legalization to pull us through economic hard times. People can speculate all they want, buy they don’t really know what kind of taxes this will generate. We should legalize for the RIGHT reasons, not just because money is wasted on law enforcement and nonviolent offenders, but because LIVES are wasted this way. Free the herb. Free the people.
        Free the farmers! The greatest benefit, that I don’t hear anyone talking about, is that farmers could grow hemp! Hemp is huge cash crop. It doesn’t require synthetic pesticides or fertilizers; and we can make everything from food to fuel to fiber with it. Hemp is a miracle and it needs to be free.

  • I agree, our society should legalize for the right reasons. We don’t know if we can pivot legalization toward our parochial community ends here, but we should try.

    My personal wild guess is that we’re creating a short- to medium-term strategy that will bridge us a bit into the unknown, scary future. We shouldn’t just roll over into it, but it’s coming.

  • I agree, our society should legalize for the right reasons. We don’t know if we can pivot legalization toward our parochial community ends here, but we should try.

    My personal wild guess is that we’re creating a short- to medium-term strategy that will bridge us a bit into the unknown, scary future. We shouldn’t just roll over into it, but it’s coming.

  • I know we have to legalize it and I know we can cushion the financial impact but I’m still trying to figure out how much I think marijuana prices will drop. I know taxing it will help CA but like Carlos I’m not sure that something everyone can grow (albeit not well) would hold to a high price if it was legal.

  • I know we have to legalize it and I know we can cushion the financial impact but I’m still trying to figure out how much I think marijuana prices will drop. I know taxing it will help CA but like Carlos I’m not sure that something everyone can grow (albeit not well) would hold to a high price if it was legal.

  • Yup, it would only be a boutique thing, and I think it would have to be associated with groovy tourism, following the Napa model as slavishly as possible. My guts say we might help some residents for awhile while building up a new, intimate backwoods tourist/leisure industry. “Chill up the hill, Bake by the lake”

    It’s that or get the gummint to pay people not to grow it, like they did my grandmommy for not growing wheat. It’s a living (or am I dreaming? Never mind).

  • Yup, it would only be a boutique thing, and I think it would have to be associated with groovy tourism, following the Napa model as slavishly as possible. My guts say we might help some residents for awhile while building up a new, intimate backwoods tourist/leisure industry. “Chill up the hill, Bake by the lake”

    It’s that or get the gummint to pay people not to grow it, like they did my grandmommy for not growing wheat. It’s a living (or am I dreaming? Never mind).

  • What are corporate PGE rates? That should heavily dictate what room there is for a drop in price on the indoor market.

    Residential is about .43 per kwh on the 4th tier, which is hit with a 2kw grow, and is even more expensive than running a genny, and after including all the other expenses, really doesn’t seem to leave any room for a lower price on the indoor market if any profit at all is to be made.

  • What are corporate PGE rates? That should heavily dictate what room there is for a drop in price on the indoor market.

    Residential is about .43 per kwh on the 4th tier, which is hit with a 2kw grow, and is even more expensive than running a genny, and after including all the other expenses, really doesn’t seem to leave any room for a lower price on the indoor market if any profit at all is to be made.

  • I’ve heard people say they could go as low as $2200 per indoor pound but that after that it would be a losing deal.

  • I’ve heard people say they could go as low as $2200 per indoor pound but that after that it would be a losing deal.

  • That would seem feasible…If every crop went perfectly. As soon as you have a problem pop up though, that is bound to happen from time to time, then at that price you would be immediately thrown into the red, and it would take a few perfect harvests in a row to even catch back up to the break even point it seems from my limited experience. Over a solid year, I can’t see how you would be able to be in the black on paper, unless you were growing a super high producing strain, which a lot of the strains that are marketable now, are definitely not. Back in the day I thought 1lb per 1kw was a crappy yield. These days with the strains that people are wanting, that same number is a super yield in some cases.

    So many people just see cash moving this way and that, and complain about how much things cost, and have no actual perception of how much of that actually does go to expenses, especially when murphy’s law comes into play occasionally.

    I guess that’s why there are greenhouses. Then you have control of a lot of the more damaging elements, without the expense of electricity.

  • That would seem feasible…If every crop went perfectly. As soon as you have a problem pop up though, that is bound to happen from time to time, then at that price you would be immediately thrown into the red, and it would take a few perfect harvests in a row to even catch back up to the break even point it seems from my limited experience. Over a solid year, I can’t see how you would be able to be in the black on paper, unless you were growing a super high producing strain, which a lot of the strains that are marketable now, are definitely not. Back in the day I thought 1lb per 1kw was a crappy yield. These days with the strains that people are wanting, that same number is a super yield in some cases.

    So many people just see cash moving this way and that, and complain about how much things cost, and have no actual perception of how much of that actually does go to expenses, especially when murphy’s law comes into play occasionally.

    I guess that’s why there are greenhouses. Then you have control of a lot of the more damaging elements, without the expense of electricity.

  • If every crop went perfectly. As soon as you have a problem pop up though, that is bound to happen from time to time, then at that price you would be immediately thrown into the red, and it would take a few perfect harvests in a row to even catch back up to the break even point it seems from my limited experience.

    Phil, you need to call State Farm over to assess your crop so you can take out a policy on it. You know, like a normal farmer.

    Back in the day I thought 1lb per 1kw was a crappy yield. These days with the strains that people are wanting, that same number is a super yield in some cases.

    Right? Some of these strains you end up with a bunch of leaves. I won’t agree that it is “these days” though. There have been excellent designer strains since the 80s, but nobody knew about them so there was no market.

    So many people just see cash moving this way and that, and complain about how much things cost, and have no actual perception of how much of that actually does go to expenses, especially when murphy’s law comes into play occasionally.

    State Farm dude.

    I guess that’s why there are greenhouses. Then you have control of a lot of the more damaging elements, without the expense of electricity.

    They have those interior folding greenhouses now. $10,000 tho.

  • If every crop went perfectly. As soon as you have a problem pop up though, that is bound to happen from time to time, then at that price you would be immediately thrown into the red, and it would take a few perfect harvests in a row to even catch back up to the break even point it seems from my limited experience.

    Phil, you need to call State Farm over to assess your crop so you can take out a policy on it. You know, like a normal farmer.

    Back in the day I thought 1lb per 1kw was a crappy yield. These days with the strains that people are wanting, that same number is a super yield in some cases.

    Right? Some of these strains you end up with a bunch of leaves. I won’t agree that it is “these days” though. There have been excellent designer strains since the 80s, but nobody knew about them so there was no market.

    So many people just see cash moving this way and that, and complain about how much things cost, and have no actual perception of how much of that actually does go to expenses, especially when murphy’s law comes into play occasionally.

    State Farm dude.

    I guess that’s why there are greenhouses. Then you have control of a lot of the more damaging elements, without the expense of electricity.

    They have those interior folding greenhouses now. $10,000 tho.

  • Anna Hamilton addressed Rotary on Tuesday and said the mood is very glum. She says the ‘straight’ business community of SoHum sees a terrible downturn if pot is legalized. I hope she will summarize her Rotary talk and the discussions for this forum.

    The first of three radio forums on the economics issue was broadcast Thursday evening from 8-10 on KMUD. Ellen Komp, Deputy Director of CaNORML and I did the first hour and interviewed Richard Lee of Oaksterdam, author of the Tax Cannabis 2010 initiative.

    Ammiano’s bill seems unlikely to pass this year, but the initiative has a much greater chance. A Field Poll indicates 56% of Californians favor legalization. As I said on the show, that’s not a prediction the initiative will pass–the opposition hasn’t started it’s campaign yet–but it shows surprising strength.

    The initiative is potentially far more favorable to small growers because it emphasizes local control of cultivation and a excise tax on retail sales, not wholesale. (It’s the Ammiano bill that suggests the $50/oz tax.) We discussed several crucial things that should start now so we can more quickly transition to a legal economy should the initiative pass–branding, organizing a local ordinance to favor small growers under legalization, and lobbying in Sacramento to get state regulations to favor small growers over agribiz. We need to get our county officials involved in this now.

    Anna emphasizes, and I agree, the need for an economic impact study. This should look at the importance of cannabis to the “emerald triangle” and other rural cannabis growing counties and be structured to help educate state regulators about the importance of small growers to local economies.

    Listen to the discussion on the KMUD archives. The time to begin is now. And if the initiative doesn’t pass in November, it will come up again, and again, in both the legislature and by ballot propositions. My personal sense is it will happen by 2012.

    Thanks for the discussion, Kym.

  • Anna Hamilton addressed Rotary on Tuesday and said the mood is very glum. She says the ‘straight’ business community of SoHum sees a terrible downturn if pot is legalized. I hope she will summarize her Rotary talk and the discussions for this forum.

    The first of three radio forums on the economics issue was broadcast Thursday evening from 8-10 on KMUD. Ellen Komp, Deputy Director of CaNORML and I did the first hour and interviewed Richard Lee of Oaksterdam, author of the Tax Cannabis 2010 initiative.

    Ammiano’s bill seems unlikely to pass this year, but the initiative has a much greater chance. A Field Poll indicates 56% of Californians favor legalization. As I said on the show, that’s not a prediction the initiative will pass–the opposition hasn’t started it’s campaign yet–but it shows surprising strength.

    The initiative is potentially far more favorable to small growers because it emphasizes local control of cultivation and a excise tax on retail sales, not wholesale. (It’s the Ammiano bill that suggests the $50/oz tax.) We discussed several crucial things that should start now so we can more quickly transition to a legal economy should the initiative pass–branding, organizing a local ordinance to favor small growers under legalization, and lobbying in Sacramento to get state regulations to favor small growers over agribiz. We need to get our county officials involved in this now.

    Anna emphasizes, and I agree, the need for an economic impact study. This should look at the importance of cannabis to the “emerald triangle” and other rural cannabis growing counties and be structured to help educate state regulators about the importance of small growers to local economies.

    Listen to the discussion on the KMUD archives. The time to begin is now. And if the initiative doesn’t pass in November, it will come up again, and again, in both the legislature and by ballot propositions. My personal sense is it will happen by 2012.

    Thanks for the discussion, Kym.

  • Legalization is coming. The pros outway the cons and the people are becoming more and more open to the idea as time passes. We have alot on the table right now, once some of those issues are fixed, legalization is next.

  • Legalization is coming. The pros outway the cons and the people are becoming more and more open to the idea as time passes. We have alot on the table right now, once some of those issues are fixed, legalization is next.

  • ” • Legalization of marijuana would cause its street price to decline by 50 percent.

    • This 50 percent decline in price would lead to additional consumption of 40 percent.

    • The imposition of the $50/ounce tax would then lead to reduced consumption of 11 percent. ”
    I’m not sure if i aggree with the second point there. Legalisation has been shown not to cause significant rise in use, but perhaps it may seem that way since more people are inclined to admit to it. And some of the most open minded countries don’t show a particularly high percentage of their population as using. Personally i think the market should be flooded with the stuff in a controlled manner, take the money out of it, which in turn would take the “funding organised crime” argument out of the equation.

  • ” • Legalization of marijuana would cause its street price to decline by 50 percent.

    • This 50 percent decline in price would lead to additional consumption of 40 percent.

    • The imposition of the $50/ounce tax would then lead to reduced consumption of 11 percent. ”
    I’m not sure if i aggree with the second point there. Legalisation has been shown not to cause significant rise in use, but perhaps it may seem that way since more people are inclined to admit to it. And some of the most open minded countries don’t show a particularly high percentage of their population as using. Personally i think the market should be flooded with the stuff in a controlled manner, take the money out of it, which in turn would take the “funding organised crime” argument out of the equation.

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