A Closer Look at Prop 64 in California: Part 2

The Stakes

The stakes could not be higher. Although estimates are hard to pin down for obvious reasons, experts say if Prop. 64 passes, California’s marijuana market could well exceed $6 billion a year by 2020. That’s a lot of jobs and a lot of real wealth creation.

“In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects,” wrote French economist Frédéric Bastiat. “Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.”

What is unseen with marijuana legalization is the opportunity it presents. Sure, experts do their best to foresee what will happen, but the economic effects of something this big simply cannot all be taken into account. Taking a massive underground industry and bringing it into the light in a state as big as California will cause reverberations across the U.S. for years to come.

The unseen works both ways as well. Some people fear what they cannot see, or even worse, they imagine they see things that they fear might happen. The medical community in CA is scared; it’s visible every day on social media platforms and blogs. To them it is their medicine and quality of life that is at stake. Proponents of Prop. 64 do their best to allay those fears.

“The biggest misconception is that Proposition 64 will impact the Compassionate Use Act,” Diane Goldstein told us. “It’s stunning to me the amount of misinformation being put out by otherwise intelligent activists. I have shared an article written by Bill Panzer who you know to be a prominent activist and attorney who is a Legal Committee Member of NORML and who wrote this piece recently in the Leaf Online.

“He asserts after an in-depth analysis that ‘in summary, Prop. 64 will have no impact on patients under Prop. 215 but it will grant new protections to medical cannabis users who find themselves in family or juvenile court.’”

Taxes

Many in the California medical community worry about taxes raising the price of their medicine. As I’ve written countless times before, in a perfect world, legal cannabis would not be taxed. But as I’ve also written countless times, that is not the world we live in.

From Ballotpedia: “Proposition 64 would create two new excise taxes on marijuana. One would be a cultivation tax of $9.25 per ounce for flowers and $2.75 per ounce for leaves, with exceptions for certain medical marijuana sales and cultivation. The second would be a 15 percent tax on the retail price of marijuana. Taxes would be adjusted for inflation starting in 2020.”

But as we have seen in states like Washington, legalization lowers the price of cannabis. Economically, this is the only way it can be. When supply is increased relative to demand, prices fall. Legalization increases the supply by undercutting the black market and drawing in investors to grow and sell legal marijuana for profit. Police raids end and plants stop being destroyed. A 2010 study from the RAND Corporation showed that legalization could cause massive price drops in California, more than enough to offset any taxes that may be added.

Yes, the price would be even lower without the taxes, but again, that is not the world we inhabit.

What Happens if Prop 64 Doesn’t Pass?

Likely, several things:  

1) the California Legislature will continue to place new regulations on the existing medical marijuana program established under Prop. 215.

2) Recreational legalization will become a dead issue in CA. No one is going to want to sink millions of dollars into a ballot measure that will just be fought by a horde of activists and growers in the state as well as the usual litany of prohibition supporters.

But worst of all, defeat in California will be a serious blow to the marijuana law reform movement overall. It could overshadow success in other states, especially in the media. Some activists like to think that legalization is inevitable and that we can keep going back to the ballot box every 2 years until we “get it right.”

But what if that’s not the case? What if most voters just get tired of the issue and decide things are good enough the way they are and that we should move on to more pressing matters? What if financial backers, like the much-maligned Sean Parker, decide that fighting prohibition is not worth the time, money or headaches and funding dries up? What if constantly telling ourselves that legalization is inevitable is what ultimately destroys its inevitability?

Other Impacts of Passage

Passing Prop. 64 will also greatly impact law enforcement and local communities.

“I’ve written a couple of opinion pieces that were published in the San Diego Union Tribune and the Orange County Register that describes why I and Law Enforcement Against Prohibition support the Yes on 64 campaign,” Diane Goldstein told The Marijuana Times.

“For me the two most important issues are the clarity in the law that will make our communities safer by minimizing the harms of the illicit market and the social justice issues. Leafly made me a part of their national campaign called #whatsyourreason to vote. I’m really proud to have made this as it captures how marijuana prohibition and the drug war negatively impacted our communities.

“Proposition 64 will not eliminate all disparities in enforcement but will go a long way to protecting all Californians and in particular communities of color from the harms of drug prohibition.”

Regulation

Prop. 64 comes with a lot of the regulations, which we have come to expect from legalization measures, built in. If it passes, the Bureau of Medical Cannabis Regulation would be renamed the Bureau of Marijuana Control and it would be responsible for regulating and licensing marijuana businesses. Counties and municipalities would be able to restrict where marijuana businesses could be located. Local governments would also be able to completely ban the sale of marijuana from their jurisdictions.

There are also safeguards built in for parents who worry about their kids having access to marijuana.

Will It Be Enough?

Will it all be enough to end marijuana prohibition in California? Even in a year where 5 different states are deciding on recreational marijuana legalization, Cali will dominate the news cycles and the social media posts; that’s how big the state is in terms of population and possible economic impact.

It is also the state that is the farthest west of those deciding on legalization, so it may well be the last result we see on Election Night. It will determine in the minds of many whether or not the cannabis law reform movement is ultimately successful on November 8th.

Time grows short in the Golden State. Election Night 2016 will determine much about the future of California and the future of the United States.

Read Part 1 here.