How Would the Legalization of Marijuana Impact California?

How Would the Legalization of Marijuana Impact California?

The idea of legalizing marijuana has been argued for years and many believed it was simply the rights of the “pot-heads” at stake. In truth, authorities are looking at a much bigger issue, one that involves the violence spilling over from Mexico and the constant, losing battle between users and the law. The assumption is that legalizing marijuana will allow for a flooding of the market, which will drive the price down and make it less appealing for dealers.

A recent study by the RAND Corporation, a non-profit, suggests that the legalization of the production and distribution of the drug has the potential to cut the price by as much as 80 percent, while also significantly increasing consumption. This could be quite appealing to lawmakers who envision taking marijuana and cashing in on the lucrative trade.

According to estimations by the state Board of Equalization, placing a tax on legal marijuana has the potential to generate more than $1 billion in revenue. The problem with this assumption is that it is based on a number of key factors that are dynamic in nature and could easily change. Consider the fact that this figure relates to a tax on a substance that has been illegal for years – why would the community involved in the production and use of the drug suddenly hand over a portion of their profits to the government?

Consistent research into this area suggests that the consumption of marijuana quickly increases when prices go down, although exact consumption figures cannot be captured simply due to the incredible price drop that is expected to occur if the substance is legalized. Marijuana has never fallen beyond a certain price point and therefore, consumption at lower price points has not been studied.

Consumption may also be driven by advertising and a reduction in the stigma associated with use. As researchers are unable to predict the taxes that may be levied and then evaded, it is difficult to measure consumption expectations based on these unknown figures. It is safe to assume consumption will significantly increase, but to assume it is only by 50 or even 100 percent could be estimating too low for accurate data.

The study’s lead author, Beau Kilmer suggests there is still too much uncertainty about the impact legalizing marijuana in California can have on consumption, as well as public budgets. As no government has yet to legalize the production and distribution of the substance for general use, there is little evidence to suggest whether the outcome will be beneficial or detrimental to the state of California.

It isn’t surprising that California is examining the possibility of legalizing marijuana as it could save considerable revenue in terms of law enforcement fighting the illegal trade. The state is also in financial upheaval and the potential tax revenue from the taxing of marijuana would substantially boost the state’s budget – if they could enforce the tax effectively.

All of these elements still remain unknown and a legalization of the substance in California will certainly be a wager that could truly go either way. Authorities will simply have to decide if the risk is worth the potential benefits.

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