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Explaining Proposition 64: How California Would Legalize Marijuana

Don Goofy / Flickr
 

Don Goofy / Flickr

There are so many questions about California’s November ballot measure that would legalize recreational marijuana that it’s easy to overlook the most basic question of all: What would the initiative actually do?

Well, we’re here to help.

Prop 64So get your sample or mail-in ballots out and follow along as we go through that little Proposition 64 summary together. It’s right next to where you vote “yes” or “no.”

And just like in the voter guide, we'll throw in a few “pro” and “con” arguments too.

Okay, let's get started...

 

Proposition 64 legalizes marijuana under state law, for use by adults 21 or older.

Starting immediately, it would no longer be a crime in California to buy, possess or transport limited amounts of marijuana for personal use. You could cultivate up to six plants in the privacy of your own home – either indoors or outdoors, as long as it’s not visible to the public.

“They can’t sell it, but they can grow it for their own personal use,” explains Richard Miadich, the lawyer who wrote the initiative and works for the Yes on 64 campaign.

Miadich says you can only smoke or consume marijuana products – including edibles – at a private home, or at a business that gets a license to allow on-site consumption.

“You cannot use marijuana, ingest marijuana in any way, in public,” he says. “You can’t use it or ingest it anywhere where smoking is prohibited.”

Proposition 64 imposes state taxes on sales and cultivation.

A lot of taxes, in fact. There would be a state excise tax on cultivation of $9.25 per ounce of marijuana flowers and $2.75 per ounce of marijuana leaves; and a state excise tax on sales: 15 percent of the retail price.

That’s on top of the regular sales tax that we pay on everything from cars to couches, though medical marijuana patients would be exempt from sales tax. And local governments can throw their own excise tax on top too.

 

Consumers wouldn’t pay the cultivation tax directly. But if you live in a city with a particularly high sales tax rate that chooses to also add a local excise tax, your total taxes might reach 30 percent.

“That, to me, is ridiculously high,” says Jamie Kerr, the founder of a storefront medical marijuana dispensary in the city of Shasta Lake and an opponent of Proposition 64. She wants to see California legalize marijuana but says this is the wrong way to do it.

“That (combined tax rate) exceeds the threshold at which we start to promote the illicit market,” Kerr says, “and that’s a concern.”

“You want to strike the right balance,” counters initiative author Richard Miadich, “of not having a tax that's so high that you perpetuate the illegal market – which is what of course we want to eliminate by enacting this initiative – but not have a tax rate that's so low that it encourages overuse by adults, for example.”

Miadich says the tax rates set by Proposition 64 are just starting points. The Legislature can adjust any rates it decides need to be tweaked.

Proposition 64 provides for industry licensing

Although California voters legalized medical marijuana in 1996, it wasn’t until last year that the governor and Legislature finally created a regulatory framework. The regulations themselves are still being written.

“The state will be in charge of licensing cultivators, manufacturers, distributors and retailers of nonmedical marijuana,” Miadich says, “just like it is for medical marijuana.”

Proposition 64 generally piggybacks on the system created by California’s medical marijuana laws – but not entirely.

Kerr, the dispensary founder, says the initiative eliminates existing protections that prevent large companies from controlling too many links in the supply chain.

Those protections exist, she says, to allow the current medical marijuana industry “fair and equitable market access, without having to immediately right out of the gate compete with some well-capitalized corporate interests that are wanting to get into this space.”

Miadich says state regulators would have the ability to deny license requests if they would lead to anti-competitive behavior.

Proposition 64 establishes standards for marijuana products.

The initiative sets at least one very specific standard:

“For example, there's a limit on the level of THC that can be in a serving size of edible marijuana products,” says Drew Soderborg with the nonpartisan Legislative Analyst's Office.

But it leaves some other limits up to state regulators. Such as, how big is a serving size? What are the testing requirements? And, the hot-button question of what exactly constitutes drugged driving?

Miadich says there's not enough research to set a legal standard for marijuana intoxication, so Proposition 64 gives the state money to do its own research.

“People are using marijuana today and they are driving today,” he says. “So this initiative accepts that that problem exists today and offers solutions for it.”

Kerr calls that irresponsible.

“To roll out the adult use market – which literally banks on increased usage to generate the revenue that is expected and that is projected – I think that it’s putting the cart in front of the horse,” she says.

Proposition 64 allows local regulation and taxation.

If Proposition 64 passes, local governments would have some powers – but not others.

“You cannot ban indoor cultivation for personal use,” says Tim Cromartie with the League of California Cities, “although you can regulate it.”

For example, Cromartie says, cities and counties could require residents to obtain permits, pay fees, and let their homes be inspected to prevent fire risk, excess water use, or mold.

And local governments can choose to ban recreational marijuana businesses entirely – just like they can choose to ban medical marijuana businesses.

“If you decide to allow them,” Cromartie says, “you can decide under what circumstances – what’s the local licensing fee gonna be, what kind of inspections or audits are they gonna have to comply with.”

If a local government chooses not to set regulations, the state can unilaterally issue a license.

Fiscal impact: Additional tax revenues ranging from high hundreds of millions of dollars to over a billion dollars annually, mostly dedicated to specific purposes.

Remember all those taxes we talked about earlier? That money would be split several ways, including:

  • reimbursing state agencies for their regulatory costs
  • drugged driving research
  • after school programs
  • environmental restoration

There’s more, but it’s a long list. The official Voter Information Guide analysis, written by the nonpartisan Legislative Analyst’s Office, has the details.

Fiscal Impact: Reduced criminal justice costs of tens of millions of dollars annually.

This gets to the other major result of legalizing recreational marijuana.

Proposition 64 would reduce penalties for many marijuana-related crimes. And it would allow people with crimes on their records to ask a court to reduce their sentences or expunge their records – with one caveat:

“The court would have to decide whether or not the individual represents a public safety threat,” says the LAO’s Drew Soderborg.

Oh, one last thing:

If Proposition 64 passes, the state and local governments would need to set their standards and regulations by Jan. 1, 2018 – because that's when they'll need to start issuing licenses. The rest of the initiative would take effect the day after the election – as long as it's not too close to call.