http://www.cbsnews.com/stories/2009/07/15/national/main5163119.shtml?tag=topnews

SAN FRANCISCO, July 15, 2009
Legal Pot Would Bring in $1.4B for Calif.
Tax Officials Release Analysis of Revenue Benefits for Cash-Strapped State; Legalization Bill Pending

(AP) A bill to tax and regulate marijuana in California like alcohol would generate nearly $1.4 billion in revenue for the cash-strapped state, according to an official analysis released Wednesday by tax officials.

The State Board of Equalization report estimates marijuana retail sales would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes.

The bill introduced by San Francisco Democratic Assemblyman Tom Ammiano in February would allow adults 21 and older to legally possess, grow and sell marijuana.

Ammiano has promoted the bill as a way to help bridge the state's $26.3 billion budget shortfall.

"It defies reason to propose closing parks and eliminating vital services for the poor while this potential revenue is available," Ammiano said in a statement.

The way the bill is written, the state could not begin collecting taxes until the federal government legalizes marijuana. A spokesman says Ammiano plans to amend the bill to remove that provision.

The legislation requires all revenue generated by the $50-per-ounce fee to be used for drug education and rehabilitation programs. The state's 9 percent sales tax would be applied to retail sales, while the fee would likely be charged at the wholesale level and built into the retail price.

The Equalization Board used law enforcement and academic studies to calculate that about 16 million ounces - or 500 tons - of marijuana are consumed in California each year.

Marijuana use would likely increase by about 30 percent once the law took effect because legalization would lead to falling prices, the board said.

Estimates of marijuana use, cultivation and sales are notoriously difficult to come by because of the drug's status as a black-market substance. Calculations by marijuana advocates and law enforcement officials often differ widely.

"That's one reason why we look at multiple reports from multiple sources - so that no one agenda is considered to be the deciding or determining data," said board spokeswoman Anita Gore.

Predict: Marijuana Nation
Will any state legalize marijuana by the end of 2009?
Advocates and opponents do agree that California is by far the country's top pot-producing state. Last year law enforcement agencies in California seized nearly 5.3 million plants.

If passed, Ammiano's bill could increase the tension between the state and the U.S. government over marijuana, which is banned outright under federal law. The two sides have clashed often since state voters passed a ballot measure in 1996 legalizing marijuana for medical use.

At the same time, some medical marijuana dispensary operators in the state have said they are less fearful of federal raids since U.S. Attorney General Eric Holder said the Justice Department would defer to state marijuana regulations.

Advocates pounced on the analysis as ammunition for their claim that the ban on marijuana is obsolete.

"We can't borrow or slash our way out of this deficit," said Stephen Gutwillig, California state director of the Drug Policy Alliance. "The legislature must consider innovative sources of new revenue, and marijuana should be at the top of that list."

Ammiano's bill is still in committee. Hearings on the legislation are expected this fall.