Estimating Potential Tax Revenues from Recreational Marijuana in California

Billion with a ‘B’

A Department of Finance director Michael Cohen along with legal analyst Mac Taylor took a look at the provisions currently being circulated in the Adult Use of Marijuana Act (AUMA) and came up with the following numbers.

Using the AUMA’s 15% excise tax, $9.25 per ounce tax on the cultivation of flower buds, and $2.75 per ounce of ‘trim,’ tax revenues would fall into the range of high hundreds of millions to over $1 billion annually.

California already took in tens of millions from medical marijuana sales taxes alone in 2013.

AUMA does have some provisions of what should be done with the monies coming in, including up to $50 million annually dedicated to mental health and substance abuse programs in affected neighborhoods, $10 million annually for research into the impacts of legalization, $3 million annually to the California Highway Patrol to research stoned driver interdiction, and $2 million annually to research the usefulness of medical cannabis.

There is more than just the tax revenues too.

State and local government could also save a projected $100 million when all the criminal justice activities associated marijuana all but disappear.

More on the potential tax income can be found here.