This nonprofit research organization has published independent studies this year that look at the potential effects of legalizing pot in California.
RAND found that marijuana exports to the United States do not account for 60 percent of drug cartel revenues from exports, as is often reported. Rather, the cartels get only 15 to 26 percent of their money from pot trafficked to the US.
If California, which accounts for one-seventh of pot use nationwide, goes legal, total drug export revenues for the cartels will drop by “perhaps 2 to 4 percent.” The big money – and the big violence – is in harder drugs.
RAND did acknowledge an exception. If high-potency California marijuana is smuggled to other states at low prices, it could seriously eat into the cartels’ take – cutting out roughly 20 percent of total export drug money.
Still, many factors could deter smuggling (and state legalization itself), including the federal government. Any use or sale of marijuana is a criminal offense under federal law. Washington might step in to stop smuggling, or challenge the ballot measure’s legality if it passes, or withhold federal highway dollars for noncompliance with the federal law.
Don’t count on tax revenues. Pot supporters say California could reap $1.4 billion from marijuana taxes, citing an estimate by the Board of Equalization, which administers the state sales tax.
But the board assumes a $50-an-ounce tax – a rate mentioned nowhere in the proposition and one that could be easily undercut by a black market. That’s what happened in the 1990s in Canada with a mere $3 tax on cigarettes. The tax had to be repealed.
Tax evasion could be widespread, and because taxing is left up to local jurisdictions, even the potential amounts will vary. If one jurisdiction opts for a low tax rate, and the marijuana industry moves to that place, then other jurisdictions won't collect much.