November 4, 2011
Pursuant to Elections
Code Section 9005, we have reviewed the proposed statutory initiative
related to the use, possession, and sale of marijuana
(A.G. File No. 11‑0046).
Background
Federal Law. Federal laws
classify marijuana as an illegal substance and provide criminal
penalties for various activities relating to its use. These laws are
enforced by federal agencies that may act independently or in
cooperation with state and local law enforcement agencies.
State Law and Proposition 215.
Under current state law, the possession, cultivation, or
distribution of marijuana generally is illegal in California. Penalties
for marijuana-related activities vary depending on the offense. For
example, possession of one ounce or less of marijuana is an infraction
punishable by a fine, while selling marijuana is a felony and may result
in a jail or prison sentence.
In November 1996,
voters approved Proposition 215, which legalized the cultivation and
possession of marijuana in California for medical purposes under state
law. The U.S. Supreme Court ruled in 2005, however, that federal
authorities could continue under federal law to prosecute California
patients and providers engaged in the cultivation and use of marijuana
for medical purposes. Despite having this authority, the U.S. Department
of Justice’s (DOJ’s) current policy (announced in a June 29, 2011 memo
from the department to its attorneys) is to not prosecute individual
marijuana patients and caregivers who act in compliance with state
medical marijuana laws. However, the department stated that it would
continue to prosecute “commercial” medical marijuana activities.
Moreover, in an earlier October 13, 2010 letter to the U.S. Drug
Enforcement Agency, the U.S. Attorney General stated that the U.S. DOJ
would continue to enforce federal laws prohibiting marijuana activities
related to recreational use, even if such activities are permitted under
state law.
Proposal
This measure changes state law to legalize various marijuana-related
activities and regulate the commercial production and sale of marijuana.
Despite these changes to state law, activities related to the use of
marijuana would continue to be prohibited under federal law. These
federal prohibitions could still be enforced by federal agencies.
State
Legalization of Marijuana-Related Activities. The measure states
that it repeals various state statutes that prohibit marijuana
possession, sales, transportation, production, processing, or
cultivation, as well as removes references to marijuana from statutes
that regulate controlled substances. However, the measure states that it
does not repeal existing statutes that prohibit driving under the
influence of alcohol or drugs. The measure also specifies that persons
age 19 or older may legally possess, share, transport, use, distribute,
sell, cultivate, or process marijuana. In addition, the measure states
that it would be a misdemeanor crime or an infraction for persons under
age 19 to possess, cultivate, transport, or distribute marijuana, as
well as a misdemeanor crime or an infraction for any person age 19 or
older to furnish marijuana to a person under age 19.
State
Regulation of Commercial Production and Sale. The measure allows
persons age 19 or older to cultivate and possess less than three pounds
of processed marijuana and 100 square feet of marijuana plants for
personal use without being subject to regulation. However, production of
marijuana in excess of the amounts specified for personal use or for
commercial purposes would be subject to regulations adopted by a new
California Cannabis Commission that is created by this measure. These
regulations would apply to the cultivation, production, processing,
testing, distribution, and sale of marijuana. For example, the measure
requires the commission to license businesses that manufacture and sell
marijuana and establish regulations that limit their size, location, and
hours of operation. The measure states that the Legislature would be
empowered to define the organizational structure and membership of the
commission.
Fiscal Effects
The U.S. DOJ’s
announcement that it would continue to enforce federal prohibitions on
non-medical marijuana activities could have the effect of impeding the
activities permitted by this measure under state law. Also, the level of
these activities could depend upon how, and to what extent, the state
chooses to regulate the commercial production and sale of marijuana.
Thus, the potential revenue and expenditure impacts of this measure
described below are subject to considerable uncertainty.
Reduction in Various Criminal
Justice Costs. The measure could result in savings to the state
and local governments by reducing the number of marijuana offenders
incarcerated in state prisons and county jails, as well as the number
placed under community supervision (such as county probation). County
jail beds that would no longer be needed for marijuana offenders might
be used for other criminals who are now being released early because of
a lack of jail space. In addition, the measure could result in a
reduction in state and local costs for enforcement of marijuana-related
offenses and the handling of related criminal cases in the state court
system. The state and local governments may decide to redirect existing
resources to other law enforcement and court activities. In total, the
measure could result in savings to the state and local governments on
various criminal justice costs in the low hundreds of millions of
dollars annually.
Other Fiscal Effects on State
and Local Programs. The measure could also have fiscal effects
on various other state and local programs. For example, the measure
could result in an increase in the consumption of marijuana, potentially
resulting in an unknown increase in the number of individuals seeking
publicly funded substance abuse treatment and other medical services.
This measure could also potentially reduce both the costs and offsetting
revenues of the state’s Medical Marijuana Program, a patient registry
that identifies those individuals eligible under state law to legally
purchase and consume marijuana for medical purposes. In addition, the
measure would result in costs for the new California Cannabis Commission
to regulate the commercial production and sale of marijuana. Depending
on how, and to what extent, the commission chose to implement such
regulations, these costs could potentially be up to the low tens of
millions of dollars annually.
Effects on State and Local
Revenues. The state and local governments would receive
additional revenues from taxes and fees from marijuana-related
activities allowed under this measure. For instance, state and local
governments would receive increased sales tax revenues from the sale of
marijuana. In addition, businesses and individuals producing and selling
marijuana would pay individual and business taxes. To the extent that
this business activity pulled in spending from persons in other states,
the measure also would result in a net increase in taxable economic
activity in the state. However, the potential new revenues from
marijuana-related economic activity could partially be offset by
declines in other economic activity as consumers spend less on other
consumer products and/or invest less. The magnitude of the net increase
in economic activity is unknown and would depend considerably on the
extent to which the federal government enforces its laws against
marijuana in California. To the extent that a commercial marijuana
industry further develops in the state as a result of this measure,
however, our best estimate is that the state and local governments could
eventually collect hundreds of millions of dollars annually in net
additional revenues.
Summary of Fiscal Effects
We estimate that this
measure would have the following major fiscal effects:
·
The fiscal effects of this measure are
subject to considerable uncertainty depending on the extent to which the
federal government continues to enforce federal marijuana laws and
depending upon how, and to what extent, the state chooses to regulate
the commercial production and sale of marijuana.
·
Savings potentially in the low hundreds
of millions of dollars annually to state and local governments on the
costs of enforcing certain marijuana-related offenses, handling the
related criminal cases in the court system, and incarcerating and
supervising certain marijuana offenders.
·
Costs potentially up to the low tens of
millions of dollars annually to the state to regulate the commercial
production and sale of marijuana.
·
Potentially hundreds of millions of
dollars in net additional tax revenues related to the production and
sale of marijuana products.
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