The Initiative for Cheaper Pot, “Drug Tourism” — and More Tax Revenues?

Will Prop 19, the November ballot initiative to legalize and tax cannabis, produce significant new tax revenues for the state?

A new study from the think tank RAND has an intriguing answer: It depends.

RAND's study reaches a series of conclusions. Perhaps the central one is that legalization would reduce the retail price of marijuana by more than 80 percent.

But what that will mean for the state's revenues is unclear.

Consumption of marijuana should increase (boosting tax revenues), but it's hard to know by how much, RAND concluded. There could be a big boost if having legal pot brings residents of other states to California to engage in "drug tourism." Or maybe there won't be.

There also could be additional costs to enforcing marijuana laws that offset any gain in taxes.

But too much is unknown to predict the impact of taxing marijuana on public budgets. "Even minors changes in assumptions" about increased consumption and lower prices lead "to major differences in outcomes," the study says.

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