California will definitely be voting on whether or not to legalize recreational cannabis this November, and recent polls are showing that the majority of voters are still supportive of Proposition 64. If California does successfully legalize weed, it will be the most populated state with legal cannabis by far. Not only will it bring in more money from potential tourism, but the state is already full of cannabis patients and casual smokers without med cards. There are plenty of good reasons to vote yes on Proposition 64, such as finally permitting adults to grow their own cannabis in their homes, but one of the biggest advantages that’s on everyone’s mind is the potential tax revenue. Colorado has seen some incredible amounts of cash come in from their high taxation rate on recreational cannabis, which has Californians wondering how much money they can expect legal weed to generate and where that money will end up going in the state’s budget.
There is no doubt that California could use the extra revenue, and legal cannabis might be exactly the answer we need. In Colorado the extra money brought in from pot taxes are used to help build schools, roads, and supplement city budgets, but it appears that tax revenue would be used much differently in California. Those opposing Proposition 64 have pointed out that California’s measure wouldn’t innately allocate any funds to local schools and governments. While this is partially true, depending on how the tax revenue is dispersed, those two groups could definitely still benefit. So where will most of the estimated $1 billion in new tax dollars end up going? Much of it will go to new government programs such as environmental cleanings, helping underprivileged children, drug use prevention and treatments, and law enforcement. The reason California is avoiding public use of the new tax revenue, is because they are concerned it would only incentivize towns to become pot centric places. The idea is that public education is too essential of a budget item to make even partially reliant on cannabis sales.
At this point in time, most of the cannabis companies based in California are paying an 8 percent state sales tax. Last year, the state brought in over $58 million in sales tax from the 974 registered dispensaries. Almost 40 percent of those dispensaries are located in Los Angeles County. Those tax dollars are set to virtually double this year, but Proposition 64 would be a complete game changer. If California votes to legalize, we can expect to be taxed an additional 15 percent starting in 2018. The independent Legislative Analyst’s Office has predicted that it would boost our tax revenues to close to $1 billion each year. That is less than 1 percent of California’s total budget, but would still be a huge contribution. Medical marijuana patients would be exempt from the new 15 percent tax, which could lead to an overall price drop like we’ve seen in Colorado. Millions of dollars each year will first be spent to cover any administrative costs the state has in regulating legal cannabis, but after that most of the money has been divided into percentages for a variety of uses, many related to ending this senseless drug war. It will be interesting to see if California voters are satisfied with the proposed tax use, or if it turns them away from voting yes on Proposition 64.