Hungry For Taxable Dollars, California Is Ready To Cash In On What It’s Been Missing

by | Sep 14, 2010

Freelance writer Leland Baxter-Neal traveled to Humboldt County, Calif. to report on the marijuana economy (and what it might mean for Oregon) for The Portland Mercury. California’s Proposition 19, should it pass, will legalize pot in the Golden State–while Oregon’s Measure 74 would bring medical marijuana dispensaries to the Beaver State. Both measures could have huge economic impacts for the citizens of both states.

What I like about Baxter-Neal’s coverage is the fact that his article is not about politics. From a moral or political point of view, legal pot is a loser. But from an economic point of view it’s a big winner. And given the shaky footing states, counties, cities, businesses and individual households are in right now, a big economic win is exactly what’s needed.

I also find it very interesting how legalization would spread the wealth around, a fact not everyone likes, but a fact nevertheless.

California’s state tax commission estimated that legalizing and taxing marijuana sales could generate $1.4 billion in tax revenue. The tax commission also predicted, however, that the “legalization of marijuana would cause its street price to decline by 50 percent.”

That thought has sent chills through the Emerald Triangle, sparking a series of community meetings where the notoriously reticent growers have joined economists and local government officials to craft a plan in case the bottom drops out of their livelihood. Ideas being churned out include specializing in high-end, organic marijuana or promoting weed tourism—picture tours of weed farms much like wineries, and pick-your-own-bud farms.

Right now this multi-billion dollar industry is conducted on the black market. Change that and you not only fill the state’s coffers, you also spur private sector innovation. Weed tourism, for one, sounds like a great new industry that will employ bus drivers, hotel workers, restaurant workers, and more. I can also see a future for retailers who specialize in high end strains, some of which might also offer mail order and/or home delivery.

There’s also packaging, distribution and marketing to consider. Comparing this industry to the wine industry or craft beer industry is a good idea. In Oregon alone, many hundreds of small producers make and sell Pinot Noir and Pinot Gris. How does the consumer know one Pinot from the next? Packaging, distribution and marketing is how. Again, we’re talking about a lot of non-growers and non-sellers with the ability to all of a sudden make a lot of money by going into business with said purveyors. Naturally, all that money is taxable too.

It’ll be interesting to see what develops. Once the cash registers in California start to ring, it’s a sound that will be heard around the world. And it won’t take long for people outside of California to realize that prohibition is a horrible burden on their state, whereas legalization is the opposite.