How Much Money Will California Make From Their Weed Tax? It Could Bring In A New Line Of Revenue For The State

A woman smokes marijuana during a demonstration in front of the Mexican Senate building in Mexico City on September 28, 2016. Dozens of young people demand the approval of the use of marijuana for medicinal and recreational purposes. / AFP / PEDRO PARDO (Photo credit should read PEDRO PARDO/AFP/Getty Images)
Source: PEDRO PARDO/AFP/Getty Images

Forget the presidential election. For Californians, there was something else on the ballot that deserved their attention — legalizing marijuana. California Proposition 64, the California Marijuana Legalization Initiative, was up for vote on Nov. 8, and with it comes the possibility of an entirely new stream of revenue for the state. Now that Proposition 64 has passed, it will place two new taxes on weed, one for cultivation purposes and the other on its retail price. How much money could California make from this weed tax? The answer likely had Californians voting "yes" on election day. 

The Golden State could eventually rake in as much as 1 billion annually from the marijuana initiative, according to an estimate from California's Department of Finance. The newly captured revenue would then be divvied out among four different categories: $50 million per year for mental health and substance abuse programs; $10 million on research to analyze the impact legalization has had on the state; $3 million for the California Highway Patrol to research a possible uptick in DUIs; and $2 million to research medical marijuana's usefulness and potential side effects. 

Additionally, the state is estimated to save an extra $100 million per year due to a reduction in marijuana-related criminal justice costs. 

Making recreational marijuana legal for Californians 21 and up will certainly have its benefits. These numbers reflect a growing trend among states that have already legalized the recreational use of marijuana, which have generally shown a massive boost in tax revenue. 

Still, the proposition had its naysayers, and the opposition was largely coming from a place you may not expect: California's local weed growers. Some said that the proposition — which tacks on a 15 percent tax for all weed sales — wasn't worth the cost to their business. In short, some believe that the legalization of marijuana will take the product out of the hands of growers' and place it exclusively with the government. The red tape, essentially, could then drive them out of business.  

"I don't want to replace a criminal injustice with an economic injustice," Hezekiah Allen, a third-generation marijuana farmer, explained to Reuters in October. 

A local real estate broker shared a similar sentiment with the San Francisco Chronicle: "It's like a gold rush. People are coming from all over the place, from different states, and they’re all buying to grow or to split the land up for multiple people to grow. It’s pot on crack, and it’s driving prices up."

Despite the opposition, the measure ultimately passed. A statewide USC Dornsife/Los Angeles Times released last week found that 58 percent of likely California voters supported Proposition 64.

And who knows, with the results of this election, maybe Californians will deserve to smoke a little weed?

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