Smoke up Arnold!

California: Pot tax could generate $1.4 billion

Making marijuana legal could help state fix money problems, report says.
Posted by Elizabeth Strott on Thursday, July 16, 2009 8:05 AM
California's problems could be solved with a little weed.
In a report released late Wednseday, the State Board of Equalization said that California could reap $1.4 billion in revenue from taxing and regulating marijuana. The report estimated that retail sales of marijuana would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes.

And that revenue could be put toward the state's $26.3 billion budget gap.

San Francisco Democratic Assemblyman Tom Ammiano proposed a bill in February that would allow adults 21 and older to legally possess, grow and sell marijuana. "It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available," Ammiano said in a statement.

Hearings on Ammiano's bill are expected in the fall.

About 16 million ounces, or 500 tons, of marijuana are consumed in California each year, the Equalization Board calculated, based on law enforcement and academic studies. In 2008, law enforcement agencies seized nearly 5.3 million marijuana plants.

In late June, the state started issuing IOUs for the second time since the Great Depression and the first time in 17 years as Gov. Arnold Schwarzenegger and lawmakers continued to battle over the budget gap. The IOUs help the state controller stave off a deficit of nearly $3 billion for July.