October 3, 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. 11‑0034).
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 less than one ounce 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 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 to adults or minors, transportation, production,
processing, or cultivation, as well as removes references to marijuana
from all 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 adults may legally possess, share, transport, use,
distribute, sell, cultivate, or process marijuana. Although the measure
states that its purpose is not to condone the diversion of cannabis to
minors, it effectively legalizes marijuana-related activities by minors
by repealing various state statutes which prohibit these activities.
State Regulation of Commercial
Production and Sale. The
measure allows adults 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 the
California Department of Public Health (DPH). These regulations would
apply to the cultivation, production, processing, testing, distribution,
or sale of marijuana. For example, the measure requires the department
to license businesses that manufacture and sell marijuana and establish
regulations that limit their size, location, and hours of operation.
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
significant uncertainty.
Reduction in State and Local
Correctional 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 county probation or
state parole supervision. These savings could reach several tens of
millions of dollars annually. The county jail savings would be offset to
the extent that jail beds no longer needed for marijuana offenders were
used for other criminals who are now being released early because of a
lack of jail space.
Reduction in Court and Law Enforcement
Costs. The measure would
result in a reduction in state and local costs for enforcement of
marijuana-related offenses and the handling of related criminal cases in
the court system. However, it is likely that the state and local
governments would redirect their resources to other law enforcement and
court activities.
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 DPH to
regulate the commercial production and sale of marijuana. Depending on
how, and to what extent, the department 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
of potentially several tens of millions of dollars annually to state and
local governments on the costs of 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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