California stands to rake in about $1 billion annually in taxes if voters legalize recreational marijuana in the November 2016 elections, according to a recent report from the state’s Department of Finance.
Department of Finance director Michael Cohen and legal analyst Mac Taylor analyzed the front-running California marijuana legalization initiative for 2016, and estimate that state and local governments could “eventually collect net additional revenues that ould range from the high hundreds of millions to over $1 billion annually,” as reported by SFGate.
State and local governments would also save an estimated $100 million each year on marijuana-related criminal justice costs.
California was the first state in the country to legalize medical marijuana in 1996, and in 2013 the state took in approximately $59 – $109 million from medical marijuana sales with an 8.9 percent sales tax, as reported by Fusion.
Recreational marijuana taxes are predicted to dwarf medical marijuana taxes partly because the recreational market is simply much larger than the medical market, but also because additional taxes will be tacked onto recreational sales under the Adult Use of Marijuana Act’s proposed law.
That $1 billion in taxes would come from the Adult Use of Marijuana Act’s 15% excise tax on retail marijuana; plus a $9.25 per ounce tax of the cultivation of flower buds, and $2.75 per ounce tax on less valuable, loose leaf parts of the plant, called trim.
California has already decriminalized marijuana possession to some degree.
Currently, personal marijuana possession of up to 28.3 grams is a civil infraction that carries no jail time and up to $100 in fines. Possession of more than 28.5 grams is a misdemeanor that carries up to six months of incarceration and $500 in fines.