Rolling in green?
Legalizing marijuana may — or may not — be a financial windfall for cash-strapped cities
By Jake Armstrong 07/29/2010
Many see billions of dollars in tax revenue and an untold amount of social justice in the prospect of legalizing marijuana in November.
Just not Sir Diesel, a Pasadena-area pot dealer. He says Proposition 19, which would legalize cultivation and possession of marijuana and allow cities to tax it, will spell the end of his livelihood if voters approve it in November.
“I think it’s great and everything, but it’s putting me out of business if it passes,” he said.
But what Diesel stands to lose local governments could gain by bringing California’s most-lucrative cash crop out of the shadows and into the mainstream, say proponents of the proposition.
Based on government estimates that a $50 per-ounce tax could raise as much as $1 billion statewide, Pasadena’s per-capita share of cannabis tax revenues would be as much as $4 million under that scenario, enough to significantly plug the $5.3 million budget deficit city leaders are struggling to fill.
But legalization would put Pasadena and the rest of California in a brave new economic world, and any number of factors — from soaring consumption to tax evasion to a precipitous drop in prices — could greatly alter those estimates, says a new study from the Rand Drug Policy Research Center.
So how would a city with a prudish reputation like Pasadena — whose leaders ran off a Hooters restaurant and paid $4.6 million to keep lap dances out of town — approach paying its way with profits from a substance that would still be illegal under federal law? The community may just have to hash it out, so to speak.
“There are a lot of ways to generate money,” said City Councilman Chris Holden, chair of the council’s Finance Committee, where any plan to tax the herb would likely begin. “But the question is a counterbalancing moral question and community question that has to be discussed and worked through.”
The Pasadena Council would first have to take an official position on the proposal before even dreaming up the framework for a tax, Holden said. That task begins with the city’s Legislative Policy Committee, which advises the full council on the impacts of legislative proposals. Mayor Bill Bogaard, who chairs the committee, did not return a call for comment on whether the committee will be taking a position.
“There are a lot of issues here, whether or not it even passes,” Holden said. “We could set up gambling in Pasadena and probably generate a lot of money. But does that mean we do it?”
The racial question
Some say the legalization question has as much to do with racial equality as it does personal freedom. The California NAACP last month pledged its unconditional support for Proposition 19, with President Alice Huffman noting that black men disproportionately bear the burden of surging numbers of marijuana arrests in the past two decades.
As enforcement of marijuana laws surged in the past 20 years, reaching a zenith of 61,000 arrests in 2008, the number of people of color — especially young black men — arrested has far outpaced the rest of the population. Blacks and Latinos made up 56 percent of the arrests but only 44 percent of the population in 2008.
Pasadena has followed suit, with three times as many blacks arrested for misdemeanor possession than whites in the past five years, a disparity the Pasadena Weekly revealed in October after investigating four decades worth of arrest data.
Joe Brown, head of the Pasadena NAACP branch, said he supports the initiative because it will negate the impact current marijuana laws have had on the black community. But many community members are still in a quandary over what benefits legalization would bring, whether in terms of revenue or public health, he said. “Locally, I guess the jury is still out — across ethnic lines, across socioeconomic lines,” Brown said.
Brown is planning to hold in mid-August a series of community meetings with faith-based groups and others to give the matter greater perspective. “Numerous other organizations, they bring these challenges to us as if we are the only ones who can carry the water in this one. But, at this point, it has to be a little broader than that,” Brown said.
‘Altered state?’
Under Proposition 19, local governments would be able to pass regulations and taxes on commercial marijuana-related activities. But legalization for widespread use and cultivation is an unprecedented step — no government in the world has gone that far — so the budgetary and societal impacts are anything but certain, according to the Rand study released this month, “Altered State? Assessing how marijuana legalization in California could influence consumption and public budgets.”
As cultivation moves out of the shadows and into legal production, the current $375 price for an ounce of high-quality marijuana could drop to as little as $38, the study found. Researchers also said they could not negate the possibility that falling prices for marijuana could increase consumption by 100 percent or more, matching levels recorded in the late 1970s.
Estimating tax revenues is also tricky, according to the study. Tax evasion, taxation methods from city to city and the individual tax rates alone are likely to vary substantially, making it difficult to judge how much money legal marijuana could raise. But the study did concur with previous analyses that legalization would save the $300 million cost of enforcing current marijuana laws, which overwhelmingly produces misdemeanor arrests that require no jail time.
If anything, the study underscores the haze surrounding many assessments of legalizing marijuana.
“There is considerable uncertainty about the impact that legalizing marijuana in California will have on consumption and public budgets,” Beau Kilmer, the study’s main author, said in a written statement. “No government has legalized the production and distribution of marijuana for general use, so there is little evidence on which to base any predictions of how this might work in California.”
A marijuana model
Proposition 19 proponents consider the city of Oakland a model for how California cities could approach taxation if the measure passes.
The Oakland City Council last week gave the green light to four large-scale commercial indoor medical marijuana farms, a prospect in which city leaders saw benefits of increased revenue and safety, potentially reducing code violations that could lead to fires while hindering crime near grow houses. Not only will operators of the indoor farms be required to carry $3 million worth of insurance, they will also have to pay a $200,000 annual fee to the city and hire security.
A medical marijuana business tax voters enacted a year ago could bring in $1.5 million this year.
Holden said many more questions must be answered before Pasadena heads down that road.
“There are still a lot of threshold questions that probably need to be waded through,” he said.
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Comments
Before more extensive commentary later (collective groan from the PW-reading public), just a quick note to "Conservative Christian:" You still seem to be caught up in the "Reefer Madness" of it all. Alcohol is MUCH MORE "damaging" to any person's health than is marijuana, which is -- in no way -- as harmful as pack cigarette smoking.
For example, NOT ONE instance of cancer has ever been distinctly attributed to smoking (just) pot.
http://www.washingtonpost.com/wp-dyn/con...
And as far as the cancer-causing substances present in pack (as opposed to pipe or cigar) cigarette tobacco? Back after WWII, America's loving government desperately needed a corporate-media distributed, distracting excuse for the vast increase of lung cancers just beginning to afflict our nation's expanding arena for nuclear testing fallout.
http://www.acsa2000.net/HealthAlert/radi...
In other words, just 'cause the government claims it, don't necessarily mean it's so.
DanD
posted by DanD on 7/29/10 @ 07:42 a.m.
@DanD: I think you might want to reread CC's post there. Y'all might not agree on the health (non?)impact of marijuana, but it sure sounds like you agree on making it legal. Pick your battles, and your allies, right?
posted by cyranojoe on 7/30/10 @ 01:47 p.m.
cyranojoe;
You are right, I had a minor difference of opinion with CC regarding the relative hazards of marijuana, as contrasted by alcohol and pack cigarette smoking. Indeed, I thought that she/he wrote a very valid response.
Otherwise, exactly were did I vacillate within my post?
DanD
posted by DanD on 7/30/10 @ 06:30 p.m.
I hope my kids don’t use marijuana, either as teenagers or as young adults, but if they do, I REALLY hope they don’t end up in jail! I hope that all parents will join in the fight to stop putting our own kids in jail over something as silly as marijuana. Yes, it dumbs a person down for a little while (about as bad as a day on the video games) and yes, it has some minor health effects (about as bad as smoking a cigarette, I suppose), but those aren’t NEARLY as bad as the effects of being locked up IN JAIL WITH THE SEXUAL PREDATORS, and loss of financial aid, etc. that comes, not from the marijuana, but from the LAW. It’s time to quit letting government officials ruin our kids’ lives over a little marijuana!
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