How California’s marijuana legalization could influence consumption and public budgets
California Assembly Bill 2254—often referred to as the Ammiano bill—and the Regulate, Control, and Tax Cannabis (RCTC) proposition would legalize marijuana use for those 21 and over in California. The Ammiano bill would allow the state to regulate production and distri- bution and initially apply an excise tax of $50 per ounce. The RCTC proposition would allow local governments to choose whether and how to regulate and tax production and distribution.
Two issues central to the debate are how legalization would affect marijuana consumption and public budgets. Governor Arnold Schwarzenegger suggested that “it was time for a debate” about legalization to generate revenue, and one government analysis estimated that taxing marijuana at $50 per ounce would generate $1.4 billion annually in revenues.
In this occasional paper, researchers addressed these two issues by constructing a model based on a series of estimates of current consumption, current and future prices, how respon- sive use is to price changes, taxes levied and possibly evaded, and the aggregation of nonprice effects (such as changes in attitudes).
This occasional paper results from the RAND Corporation’s Investment in People and Ideas program. Support for this program is provided, in part, by the generosity of RAND’s donors and by the fees earned on client-funded research.
Rosalie Liccardo Pacula is a recipient of a 2010 RAND President’s Award. One vehicle through which RAND invests in people, President’s Awards recognize individuals who have made outstanding contributions to the RAND community while exemplifying RAND’s core values of quality and objectivity. Made possible by the generosity of donors to the RAND Policy Circle, the awards provide staff with research time and support to pursue activities related to career development or exploratory research.
This project did not have an external sponsor; the time used to conduct the work was either donated by the authors or internally funded by two of the RAND Corporation’s units: RAND Health and RAND Infrastructure, Safety, and Environment.
Authors: Beau Kilmer, Jonathan P. Caulkins, Rosalie Liccardo Pacula, Robert J. MacCoun, Peter H. Reuter