Faced with one of its worst budget crises in years, the state of California must cut many important services and contemplate raising taxes and imposing new fees. Legalizing, regulating and taxing cannabis is a huge potential source of state revenue. According to California’s State Board of Equalization, the revenue from legalizing and taxing cannabis should net the state roughly $1.4 billion annually. While that alone would not solve the budget crisis, it would help.
The state budget is a zero-sum game and services need to be funded. By failing to legalize and tax cannabis, the state is choosing to bypass potential revenue. Seen another way, to keep cannabis illegal, the state needs to cut $1.4 billion in needed public services or increase other taxes by $1.4 billion.
Below is a list of benefits the state of California could buy if it chose to generate that $1.4 billion by legalizing and regulating the use of cannabis by adults.
- Hire 23,000 teachers, police officers or firefighters.1
- Give quality private health insurance, with fully paid premiums, to 100,000 families.2
- Provide health insurance through SCHIP to 1 million children.3
- Let 51,000 students a year attend a University of California school for zero out-of-pocket, including tuition, books, room and board, transportation and other costs.4
- Provide every undergraduate in the California State University network, another state higher-education system, with $4,026, effectively paying the university fee for 307,000 full-time undergraduates.5
- Cut tuition by $2250 for every one of the roughly 600,000 undergraduate and graduate students attending a CSU or UC school. That’s a 45 percent reduction at CSU and 20 percent at UC. 6
- Send every adult living in the state a $50 cannabis-tax dividend check.7
- Provide maximum unemployment benefits for a full year to 59,000 jobless Californians.8
- Fully fund the Department of Parks and Recreation (keeping state parks from getting closed) and the Department of Alcohol and Drug Programs purely with the revenue from the tax on cannabis–with millions left over.9
- Fully fund the annual budget of the City of Anaheim.10
The question is, what will you to sacrifice to keep cannabis illegal?
When voters decide whether to legalize, regulate and tax cannabis this November, the question should not be whether they like or dislike the idea. The real question is, how much will they sacrifice to keep marijuana off the books?
The negative consequences of prohibition are significant. Is keeping cannabis illegal worth having 23,000 teachers lose their jobs? Is it worth adding $2,000 to the tuition of more than half a million students at the state’s public universities? Is it worth denying a million children health insurance or closing many of the state’s beautiful parks?
This is the type of cost-benefit analysis voters should make before they choose how to cast their ballots.
[citations after the jump]
The California State Board of Equalization concluded AB 390, a bill to legalize and tax cannabis, would raise $1.382 billion in new revenue for the state annually.
1. Assuming an annual compensation package of $60,000, within the range for those professions in California.
2. In 2008, average premiums for private employer-provided health insurance in California were $12,254.
3. In 2007, the average cost to provide a child with SCHIP coverage in California was around $1,200.
4. Assuming a $27,000-per-year cost of attending UC as an in-state student, including books, tuition, room and board and other expenses, which is in line with projected costs from Davis and Los Angeles.
6. Assuming an average fee or tuition at CSU of roughly $5,000 a year and tuition at UC of $11,000.
7. $1.382 billion divided by the adult population of California, which is roughly 27,500,000.
8. The maximum unemployment benefit of $450 a week for 52 weeks equals $23,400 a year.
10. Budget of the City of Anaheim (PDF) is roughly $1.3 billion.
[Download a list of these citations here (PDF).]