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Can Marijuana Help Rescue California's Economy?



Could marijuana be the answer to the economic misery facing California? Democratic State Assembly member Tom Ammiano thinks so. Ammiano introduced legislation last month that would legalize pot and allow the state to regulate and tax its sale — a move that could mean billions for the cash-strapped state. Pot is, after all, California's biggest cash crop, responsible for $14 billion in annual sales, dwarfing the state's second largest agricultural commodity — milk and cream — which brings in $7.3 billion annually, according to the most recent USDA statistics. The state's tax collectors estimate the bill would bring in about $1.3 billion in much-needed revenue a year, offsetting some of the billions in service cuts and spending reductions outlined in the recently approved state budget.

"The state of California is in a very, very precipitous economic plight. It's in the toilet," says Ammiano. "It looks very, very bleak, with layoffs and foreclosures and schools closing or trying to operate four days a week. We have one of the highest rates of unemployment we've ever had. With any revenue ideas people say you have to think outside of the box, you have to be creative, and I feel that the issue of the decriminalization, regulation and taxation of marijuana fits that bill. It's not new, the idea has been around, and the political will may in fact be there to make something happen." (See pictures from stoner cinema.)

Ammiano may be right. A few days after he introduced the bill, U.S. Attorney General Eric Holder announced that states should be able to make their own rules on medical marijuana and that federal raids on pot dispensaries in California would cease. The move signaled a softening of the hard-line approach previous administrations have had to medicinal pot use. The nomination of Gil Kerlikowske as the head of the Office of National Drug Control Policy may also signal a softer federal line on marijuana. If he is confirmed as the so-called Drug Czar, Kerlikowske will bring with him experience as police chief of Seattle, where he made it clear that going after people for posessing marijuana was not a priority of his force.

California was one of the first states in the nation to legalize medical marijuana in 1996. Currently, $200 million in medical marijuana sales are subject to sales tax. If passed, the Marijuana Control, Regulation and Education Act (AB 390) would give California control of pot in a manner similar to alcohol, while prohibiting its purchase to citizens under age 21. (The bill has been referred to the California State Assembly's Public Safety and Health Committees; Ammiano says it could take up to a year before it comes to a vote for passage.) State revenues would be derived from a $50 per ounce levy on retail sales of marijuana and sales taxes. By adopting the law, California could become a model for other states. As Ammiano put it: "How California goes, the country goes."

Despite the projected and much-needed revenue, opponents say legalizing pot will only add to social woes. "The last thing we need is yet another mind-altering substance to be legalized," says John Lovell, lobbyist for the California Peace Officers' Association. "We have enough problems with alcohol and abuse of pharmaceutical products: do we really need to add yet another mind-altering substance to the array?" Lovell says the easy availability of the drug will lead to a surge in its use, much like what happened when alcohol was allowed to be sold in venues other than liquor stores in some states.

Joel W. Hay, professor of Pharmaceutical Economics at USC, also foresees harm if the bill passes. "Marijuana is a drug that clouds people's judgment. It affects their ability to concentrate and react and it certainly has impacts on third parties," says Hay, who has written on the societal costs of drug abuse. "It's one more drug that will add to the toll on society. All we have to do is look at the two legalized drugs, tobacco and alcohol, and look at the carnage that they've caused. [Marijuana] is a dangerous drug and it causes bad outcomes for both the people who use it and for the people who are in their way at work or other activities." He adds: "There are probably some responsible people who can handle marijuana but there are lots of people who can't, and it has an enormous negative impact on them, their family and loved ones."

In response, retired Orange County Superior Court Judge James Gray, a longtime proponent of legalization, estimates that legalizing pot and thus ceasing to arrest, prosecute and imprison non-violent offenders could save the state an additional $1 billion a year. "We couldn't make this drug any more available if we tried," he says. "Not only do we have those problems, along with glamorizing it by making it illegal, but we also have the crime and corruption that go along with it." He adds, "Unfortunately, every society in the history of mankind has had some form of mind-altering, sometimes addictive substances to use, to misuse, abuse or get addicted to. Get used to it. They're here to stay. So, let's try to reduce those harms and right now we couldn't do it worse if we tried."

By Alison Stateman / Los Angeles Friday, Mar. 13, 2009