Weed Wars

Dispatches from the California Marijuana Front

July 21, 2010
Pot measure analysis: Employers retain authority, taxes hazy

An independent critique by the state Legislative Analyst's Office provides fodder for both supporters and opponents of Proposition 19, the measure to legalize recreational marijuana use for California adults 21 and over.

The LAO analysis seems to counter at least part of a major contention of initiative opponents who argue Prop 19 would supersede employer rules.

The analysis notes that no individual can be punished, fined or discriminated against for engaging in conduct permitted by the initiative. But it also says Prop 19 "does specify that employers would retain existing rights to address consumption of marijuana that impairs and employee's job performance."

Initiative opponents argue that legalized pot could potentially cost companies and public agencies billions of dollars in federal grants if they don't maintain drug free work environments.

But the LAO report said the measure could result in state savings that could amount to "several tens of millions of dollars annually" in reduced costs from locking up people for marijuana offenses.

But the LAO said potential tax revenues promised by initiative proponents aren't guaranteed as the measure is written. It said tax monies that will result from Prop 19 "are subject to significant uncertainty."

While the initiative would give local governments authority to tax and regulate marijuana sales, the LAO said, "It is uncertain to what extent the state and local governments would in fact undertake such actions.

"It is unknown how many local governments would choose to license establishments that would grow or sell marijuana or impose an excise tax on such sales," the report said.

However, the LAO said that the potential development of "a commercial marijuana industry" could enable state and local governments to "eventually collect hundreds of millions of dollars annually in additional revenues."

It also said legalized marijuana could actually promote a new revenue stream from pot tourism, saying, "To the extend that this business activity pulled in spending from persons in other states, the measure would result in a net increase in taxable economic activity to the state."

To read the report, click here.

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