RAND Corp.: California Pot Initiative a Stoner's Dream
|Intently studying the RAND report...|
According to "Altered State? Assessing How Marijuana Legalization in California Could Influence Marijuana Consumption and Public Budgets," legalization will likely cause pot prices to drop to less than 20 percent of today's market cost. The plummeting price will cause consumption to skyrocket -- as it always has with prices declines, the report says. But it's impossible to predict the exact consumption increase because pot prices have never declined by anything close to 80 percent. Prop. 19's main touted benefit of increased tax revenues is also hazy, the report claimed, thanks to the possibility of widespread evasion of the proposition's proposed marijuana tax.
According to the report:
Although the state could see large increases in consumption and substantial positive budget effects, it could also see increases in consumption and low revenues due to tax evasion or a "race to the bottom" in terms of local tax rates.
Consumption will increase, but it is unclear how much because we know neither the
shape of the demand curve nor the level of tax evasion (which reduces revenues and the prices that consumers face).
Additionally, the report said, law enforcement costs necessitated by the new pot regime would probably cost California around $300 million.
The RAND report did not address another likely outcome: strenuous lobbying by the newly above-board pot industry to scale back taxation and enforcement.
SF Weekly, in a landmark 2001 study, examined how this sort of political pressure emerged following the 1996 passage of California's medical marijuana initiative.
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