Costs of legalizing marijuana
Among the testfiers was Rosalie Liccardo Pacula of the RAND Corporation. She discussed four areas affecting either potential revenue or cost:
- Legalizing marijuana would drop its price considerably, more than the 50% in current revenue estimates.
- The proposal to tax marijuana at $50/ounce is not realistic; to deter the black market requires the state to let the price of marijuana fall to an amount close to production that will mean a smaller tax revenue.
- Current estimates of price are not useful for predicting a change in consumption because demand elasticities apply to small changes in price and there would be a large price drop with legalization.
- "The Board of Equalization’s estimate of $1.4 billion potential revenue for the state is based on a series of assumptions that are in some instances subject to tremendous uncertainty and in other cases not validated."
Legalizing Marijuana: Issues to Consider Before Reforming California State Law (pdf, 8pp/170kB)