The Secretary of State's office reported early Wednesday that the 'no' votes on the $1-a-pack cigarret tax known as Proposition 29 were ahead, 50.8 percent to 49.2 percent.
While 100 percent of California precincts have reported results, they aren't considered final until all absentee and provisional ballots are counted.
Most of California's coast, along with Bay Area counties -- including Santa Clara, Contra Costa, Alameda and San Mateo -- voted yes on the tobacco tax, while Los Angeles County was narrowly siding against the ballot measure.
The tension follows a hopeful party Tuesday night by a crowd of Prop. 29 supporters in Lafayette. That's the group hoping voters approve a tobacco tax that will add one dollar on to the price of a pack of cigarettes.
Groups like the American Cancer Society and Lance Armstrong's Live Strong Foundation are big supporters.
Anti-tax groups and tobacco giants Philip Morris USA and R.J. Reynolds bankrolled the no on Prop. 29 effort, outspending the "yes" campaign $46 million to $10 million.
The opposition argued that the initiative would create a new government bureaucracy, run by unelected officials who could decide to send the revenues to out-of-state research facilities at a time when tax dollars are needed to fix the state's $15.7 billion budget deficit.
Former state lawmaker Don Perata says he started working on supporting the cigarrete tax in 2006 when he learned researchers at UCSF needed funding to continue their work.
If approved, Prop. 29 is expected to generate nearly $800 million a year for research.
Big tobacco companies spent more than $60 million dollars on an effort to convince California voters to defeat the plan. Polls going into election night show it is neck and neck.
Supporters of the bill included cancer survivor Lance Armstrong and the American Cancer Society. The 'yes' campaign was wildly outspent by opponents of the proposition, mostly bankrolled by the cigarette industry to the tune of $40 million, according to MSNBC.
The proposition raises the excise tax on boxes of cigarettes to $1.87, the first increase in such taxes in more than a decade. The increase takes California from one of the lightest-taxing states on tobacco to one of the highest. The national average per-box is $1.46.
The tax is expected to generate $735 million in its first full year, according to the state's Legislative Analysis Office. They also indicate that that figure will likely decline, year over year, as smokers change their habits.
The revenue will go to cancer research, anti-smoking campaigns and health education.
At one time support for the prop had significant support, but it had fallen to 53 percent in the days just prior to June 5.
California ranks 33rd in the nation for taxing tobacco. Revenues from the tax will go into a trust fund, governed by nine members.
According to NBC's California political blog, Prop Zero:
Four members, three of whom are directors of one of the ten designated cancer centers in California, would be appointed by the governor - Two members, at least one of whom has been treated for a tobacco-related illness, would be appointed the director of the Department of Public Health - Three members would be chancellors from UC campuses that are members of the California Institute for Quantitative Biosciences Research. UCs Santa Cruz, Berkeley and San Francisco are current members.
The committee will be required to annually publicize its expenses and a summary of research accomplishments, and will be required to undergo an independent financial audit yearly.