Legalizing marijuana could cause the drug's price to plummet while increasing use by an uncertain amount, according to a new study from a respected public-policy think tank.
RAND Corp. researchers say known production costs and surveys of marijuana's current price suggest the untaxed retail price of high-quality marijuana could drop to as low as $38 per ounce, compared with about $375 per ounce now.
"There is considerable uncertainty about the impact that legalizing marijuana in California will have on consumption and public budgets," said RAND Drug Policy Research Center co-director Beau Kilmer, the study's lead author, cautioning against believing anyone who claims to know precisely how legalization would play out. "No government has legalized the production and distribution of marijuana for general use, so there is little evidence on which to base any predictions about how this might work in California."
Much of the current price of marijuana essentially is compensation to growers and dealers for the risks of being prosecuted or robbed — risks that would disappear or be minimized by legalization. Also, automated cultivation techniques and economies of scale — running bigger or multiple grows — would reduce labor and supply costs.
Past research indicates marijuana consumption goes up when prices go down, they say, but the increase in consumption can't be predicted because nobody has ever studied what would happen
The state Board of Equalization last year estimated that taxing legal marijuana could raise more than $1 billion in annual revenue, but RAND warns revenue could vary widely according to levels of taxation, tax evasion and response by the federal government, which still bans all marijuana possession, cultivation and use.
Proposition 19 on the Nov. 2 ballot would let those age 21 or older possess, grow or transport marijuana for personal use, and would let cities and counties decide whether to regulate and tax commercial production and sale, most likely creating a system of "wet" and "dry" counties as in states with similar alcohol laws.
It also would boost the criminal penalty for giving marijuana to a minor, prohibit consumption in public or while minors are present, and maintain existing laws against driving under the influence.
Also, a pending bill by Assemblyman Tom Ammiano, D-San Francisco, would legalize marijuana for those 21 or older and task the state Department of Alcoholic Beverage Control with regulating cultivation and sale. Assembly Bill 2254 would create a $50-per-ounce excise tax with proceeds used to fund drug education, awareness, and rehabilitation programs under state Department of Alcohol and Drug Programs.
California's taxed, legal marijuana would still be cheaper and easier to get than untaxed, illegal marijuana in other states, so intrastate smuggling seems likely, the study notes.
"Legalizing marijuana in California could depress sinsemilla prices and increase consumption throughout the nation," the study notes. "Since the rest of the lower 48 states have about six times as many marijuana users as does California, taxes on exports could dramatically increase California's tax revenues."
Even under a scenario with high taxes of $50 per ounce and a moderate rate of tax evasion around 25 percent, researchers can't rule out consumption increases of 50 percent to 100 percent and possibly larger, the study said. If use increased by 100 percent, that would be close to the levels of the late 1970s.
The 2007 National Survey on Drug Use and Health said 7 percent of Californians age 12 or older reported having used marijuana within the previous 30 days, compared with 6 percent nationwide. That's compared with 1978, around the height of the nation's marijuana use, when the RAND study said about 13.2 percent of the population 12 and over reported past-month marijuana use. About 19.4 percent of high-school seniors reported past-month marijuana use at that time.
The RAND study also suggests that the cost of enforcing current marijuana laws is smaller than sometimes suggested, probably totaling less than $300 million per year. Actually, the Control & Tax Cannabis 2010 committee that is supporting Prop. 19 cited a study by the California chapter of the National Organization for the Reform of Marijuana Laws that estimated the savings at over $200 million.
It's unclear whether legalizing marijuana would increase or decrease drug treatment costs, the study says: More than half of the 32,000 admissions for treatment of marijuana abuse in California in 2009 resulted from criminal justice referrals, which would drop if the drug becomes legal, but increased use could lead to more people seeking treatment voluntarily.
"Our goal is not to tell people how to vote. We do not have a horse in this race," Kilmer told reporters Wednesday. "Our goal is to provide information to move the debate forward."
California's branch of the National Association for the Advancement of Colored People last week endorsed Prop. 19. Branch President Alice Huffman called it a civil rights issue because prohibition disproportionately targets young men of color for prosecution, "the latest tool for imposing Jim Crow justice on poor African-Americans."
Bishop Ron Allen of the International Faith-Based Coalition held a news conference Wednesday in Sacramento to oppose the NAACP's position and call for Huffman's resignation.