Calif. lawmaker sees potential $1.5 billion in marijuana taxes
David Edwards and Stephen C. Webster
Published: Thursday March 19, 2009

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It's been said that many American trends, from fashion to music to governance, begin in California and move east.

If Tom Ammiano, a California state assemblyman from San Francisco, is correct in his assessment of potential tax revenues stemming from legalized marijuana, expect the debate to spread like a grassfire, so to speak.

Ammiano, who proposed legislation to legalize marijuana on Feb. 24, told CNBC's Melissa Francis on Thursday that the plant is the state's "leading cash crop" and could easily generate $1.5 billion in tax revenue the first year, if not more.

The state's assembly recently had to tackle a $40 billion budget shortfall, taking drastic measures under a declared state of "fiscal emergency."

Ammiano said that advocacy agencies have credibly placed the annual value of marijuana sales in California at or above $14 billion.

"How exactly would it work?" asked Francis. "What percentage tax would you put on it and how would you regulate it? Who would you sell it to?"

"... It would probably be a retail situation on the order of how we do alcohol," he said. "Or, the state could have the outlets. It looks like, with an excise tax of about five percent, and a sales tax, we would garner about $1.5 billion in taxes.

"The regulation would be on the order of nobody under 21, you couldn't drive under the influence. We would also save a lot of money, according to the economists, on cost-effective law enforcement. Right now, a lot of our law enforcement resources are spent on minor offenses, yet we have these terrible cartels that have infiltrated California, very violent."

"This legislation would generate much needed revenue for the state, restrict access to only those over 21, end the environmental damage to our public lands from illicit crops, and improve public safety by redirecting law enforcement efforts to more serious crimes," said Ammiano in a statement after he introduced Assembly Bill 390, the Marijuana Control, Regulation and Education Act. "California has the opportunity to be the first state in the nation to enact a smart, responsible public policy for the control and regulation of marijuana."

Ammiano described the bill as "a simple matter of fiscal common sense," according to the San Francisco Weekly.

The bill would remove "all penalties under California law for the cultivation, transportation, sale, purchase, possession, and use of marijuana, natural THC and paraphernalia by persons over the age of 21"; would "prohibit local and state law enforcement officials from enforcing federal marijuana laws"; and would create a $50 state fee for each ounce of marijuana sold, beyond whatever pot will cost once it becomes legal, the newspaper reported.

The leading legalization advocacy group behind Ammiano's bill, Washington-based National Organization for the Reform of Marijuana Laws (NORML), says recession is prompting otherwise skeptical state houses to revisit the ban on marijuana.

Over the last few months NORML has been drafted to work with state lawmakers -- even in conservative locales like Texas -- on budgetary analysis and review how legalization may enable governments fill yawning deficits.

"Cannabis for adult recreation, cannabis for medical use, cannabis as an industrial crop, and (the drug's) related paraphernalia are extremely popular and should be taxed and properly regulated," NORML executive director Allen St. Pierre told AFP. "It's just that simple."

Ammiano's bill used the most conservative estimates from NORML's analysis, and could realistically create a tax base of "up to 20 billion dollars per annum," he said.

"What do you think are the odds, seriously, that something like this could go through?" asked Francis.

"It looks good, in terms of the initial response," said Ammiano. "I'm gonna stick with this issue for as long as it takes. The lifespan of a bill coming to the floor, being voted on, is usually about a year. I'm gonna be here for at least six years.

"I think we're gonna see something that's very, very beneficial to California, not only in the idea of reforming drug policy, but also economically for us."

This video is from MSNBC's News Live, broadcast Mar. 19, 2009.

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With wire reports.

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