What would you do with $1.4 billion? California & Proposition 19

[babsbunny]

http://ideas.taxcannabis.org/forums/69799-what-would-you-do-with-1-4-billion-

What would you do with $1.4 billion? Forum

I bet you've never been asked that question before. But thanks to California's Proposition 19, we might just need an answer.

[slackmaster]

1. If you are the California legislature, you commit to spending it all before collecting a penny of it

You'll celebrate this expected influx of money even though it's only a tiny fraction of the budget gap.

Later on, when only a fraction of the expected revenue materializes, you insist that other taxes must be raised in order to avoid cutting schools and other vital public services.

When the Governor says he's going to fix the budget by shutting down state parks and putting state employees on furlough, you start blaming your inability to come up with a workable budget on members of the opposing political party.

Bloggers and talking head pundits on the left will start weeping and wailing about how Proposition 13 ruined the state.

Common 'taters on the right will blame it all on public employee unions.

K&R

:kick:

[truedelphi]

2. It should be committed to restoring the teachers, fire fighters,

police and other service people laid off due to the state's budget cuts.

But, <sigh> as usual there probably will be an inordinate amount of top officials buying new teak or mahogony furniture for their offices.

[hfojvt]

3. seems to me that with $1.4 billion

that I could buy a lotta weed :smoke:

[Xithras]

4. The LAO study has already been panned anyway.

First, it assumes that all counties will legalize commercial sales. Prop 19 doesn't make commercial pot sales legal, but simply allows the counties to decide for themselves. You'll be able to grow your own (tax free) in counties that don't allow it, but nothing will be commercially available there. A number of counties have already suggested that they won't be legalizing.

Second, the LAO assumes a $50 per ounce excise tax on pot, which was randomly pulled by a single proposal from one legislator and which most pundits are saying is unreasonably high. This is especially true in light of a RAND study released a few weeks ago predicting that pot prices will fall by 80% to 90% in California within two years of legalization. Current prices are largely driven by market forces (supply and demand), which will be upended once commercial scale marijuana farms begin operation in high production regions like the Central Valley. The commoditization of the crop will slash its value to as little as $35-$45 an ounce (currently, pot sells for $300 to $400 an ounce in California). If that happens (and MANY economists have chimed in since the release, saying the RAND numbers look about right), the LAO excise tax would amount to a 100+% tax on marijuana sales. That is untenable, and would simply lead to a gray market designed to avoid the tax.

RAND put the projected tax numbers at $800 million a year if it's legalized in every county and if a $50 per ounce excise tax is imposed, resulting in a $91 per ounce sale price, and IF those numbers lead to the projected 75% increase in the number of marijuana users in the U.S.

It's a pretty fascinating piece of work: http://www.rand.org/pubs/occasional_papers/2010/RAND_OP315.pdf