Study: If California legalizes marijuana, prices could drop up to 80 pct.

A study released Thursday by the Rand Corporation claims that marijuana prices in a post-legalization California could drop by up to 80 percent, placing some of the most delicately cultivated buds in the world at less than $40 an ounce.

An initiative that would legalize California's most valuable cash crop will be on the state's Nov. 2010 ballot. Should it pass, individual counties and municipalities would be able to opt in or out of the legalized system; those which opt in would be given additional tax and enforcement options, and residents would be allowed to transport up to one ounce and grow plants in a five-foot-by-five-foot area.

Similarly, State Assemblyman Tom Ammiano (D-San Francisco) has been pushing forward with a bill that would legalize marijuana state-wide and place a $50-per-ounce tax on all sales. He estimated tax revenues on sales alone would come to $1.5 billion in the first year. Rand researchers estimated a tax boon ranging from $650 million to $1.49 billion.

"Past research provides solid evidence that marijuana consumption goes up when prices go down, but the magnitude of the consumption increase cannot be predicted because prices will fall to levels below those ever studied," a summary noted, citing Rand researchers.

"We cannot rule out increases of 50% to 100% or perhaps higher, but we just don't know," the study added.

The study also found that as potential per-ounce taxes increase, the likelihood of customers switching to higher-potency alternatives becomes greater. It also said that a green-rush in California would spark price drops nation-wide and disrupt Mexican marijuana smuggling, which by most estimates accounts for the largest portion of the violent drug cartels' profits.

"In only two countries have there been changes in the criminal status of supplying marijuana," Rand researchers added. "The Netherlands allows for sale of small amounts of marijuana (5 grams) in licensed coffee shops and in Australia four jurisdictions have reduced the penalties for cultivation of a small number of marijuana plants to confiscation and a fine. Neither has legalized larger-scale commercial cultivation of the sort California is considering."

The Los Angeles Times added:

The report called "Altered State?" is the most scholarly examination of the issue so far. It is likely to be scrutinized and cited by both sides in the debate.

"The uncertainty and the potential chaotic nature of what could happen here just totally derails this initiative," said Roger Salazar, the spokesman for Public Safety First, one of four opposition committees that plan to fight the initiative. "Outside of the prices going down there is nothing else that is certain here and certainly not worth having the state of California become the first entity in the world to completely legalize production and sales of marijuana."

Stephen Gutwillig, the California director of the Drug Policy Alliance, said: "The current system is loaded with the certainty of mass arrest, racist enforcement and boondoggle law enforcement expenses to the tune of hundreds of millions of dollars," he said.

A marijuana advocate contacted by the Times said that even if use of the drug skyrocketed 100 percent, it would simply be returning to rates of usage seen during the 1970s.

Rand researchers also said that it is impossible to determine whether legalization will lead to more drugged driving arrests. However, the Journal of Psychoactive Drugs reported in May that after a double-blind study of 85 drivers tested before and after smoking marijuana, "no differences [in motor control and response time] were found".

The Rand Corporation, born out the U.S. Air Force following the Manhattan Project, is often cited by its critics as a thinktank that is cornerstone to America's post-World War II economic hegemony and core to the marriage of intellectual, scientific communities and the military-industrial complex. The group bills itself as a non-partisan, non-profit policy analysis center.