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$1B in Taxes Predicted from California Marijuana Legalization

California Marijuana Legalization

If California legalizes recreational marijuana for adults 21 years of age and older, it is estimated that the state could receive $1 billion per year in tax revenue. Those tax dollars would be divided amongst several state agencies, including the public school system.

Voters will have an opportunity in November 2016 to legalize recreational marijuana in California.

On December 21, 2015, the Department of Finance released a report outlining the estimated tax revenue potential. Quoted from the report completed by Michael Cohen and Mac Taylor, “In total, our best estimate is that the state and local governments could eventually collect net additional revenues that could range from the high hundreds of millions of dollars to over $1 billion annually.”

According to SFGate, recreational marijuana legalization can actually save the state $100 million per year in criminal justice costs due to the prosecution of misdemeanor marijuana violations.

These tax revenues are expected to be allocated to the following agencies:

  • $2 million annually to research the usefulness and side effects of medical marijuana
  • Upwards of $50 million for substance abuse and mental health programs
  • $3 million annually to research stoned driver interdiction for the California Highway Patrol
  • $10 million to study and research the impact of legalization

It is also stated that leftover tax monies would be allocated for teen marijuana use prevention, treatment programs, road safety and environmental restoration.

San Francisco supervisor, Fiona Ma, is in agreement with the taxes being needed. During an interview in October 2015, she claimed, “The biggest underground economy in the state is the cannabis industry. The cannabis industry wants to come out of the shadows, become legal, be law-abiding and pay their taxes. It could be five to ten billion taxable dollars per year.”