Economic Benefits of Marijuana Legalization in California

    • According to California NORML (whose mission is to move public opinion sufficiently to legalize the responsible use of marijuana by adults):

California NORML Report

    by Dale Gieringer, Ph.D. – Updated October 2009

Marijuana Legalization Could Yield California Taxpayers Over $1.2 Billion Per Year

    Additional Spinoff Benefits Up To $12 -$18 Billion
    While California struggles to address the state’s swelling budget deficit, the legalization of marijuana looms as an attractive way of raising revenue for the state.
    California NORML estimates that a legally regulated market for marijuana could yield the state at least $1.2 billion in tax revenues and reduced enforcement costs. A basic $50/ounce excise tax (roughly $1/joint) would yield about $770 – 900 million per year plus another $240-360 million in sales taxes. In addition, the state would save over $200 million in enforcement costs for arrests, prosecutions and prison. Additional benefits would accrue from increased employment and spinoff industries. Total retail sales of marijuana could be on the order of $3-$5 billion, with total economic impact of $12-$18 billion including spinoff industries such as coffeehouses, tourism, plus industrial hemp.
    California NORML’s analysis of the benefits of marijuana legalization are as follows:
  • An excise tax of $50 per ounce of marijuana would raise about $770 – 900 million per year.
  • Retail sales on the legal market would range from $3 – $4.5 billion, generating another $240 – 360 million in sales taxes.
  • Legalization would save over $200 million in law enforcement costs for arrest, prosecution, trial and imprisonment of marijuana offenders. Need for CAMP helicopter surveillance would also be eliminated.
  • Based on experience with the cigarette tax, total revenues of $1.5 – $2.5 billion might ultiimately be realized.
  • Based on experience with the wine industry, the total economic activity generated by legal marijuana could be nearly four times as great as retail sales, around $12 – $18 billion. Amsterdam-style coffeehouses would generate jobs and tourism. If the marijuana industry were just one-third the size of the wine industry, it would generate 50,000 jobs and $1.4 billion in wages, along with additional income and business tax revenues for the state.
  • Industrial hemp could also become a major business, comparable to the $3.4 billion cotton industry in California.
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