Revenue forecasts would be based on a commercial growing license for $5,000 and $2,500 annual renew few. A $50 per ounce tax would be placed on all sold and grown marijuana. These sources of revenue provide an opportunity to study and understand price elasticity for a previously illegal product.
According to The California State Board of Equalization (BOE) the estimate for total state and local revenue increase to be in the range between $990 and $1.4 billion dollars. This revenue analysis is based on various assumption that are not easily available. Sources of usage and frequency are estimated on resources such as the National Survey on Drug Use and Health, United Nations 2006 drug report. The six steps to analyzing the revenue attributed to marijuana are based on:
- Estimate base consumption
- Estimate consumption after legalization
- determine how the consumption of marijuana changes in response to the decline in price (price elasticity of marijuana)
- Introduction of excise tax and impact of demand
- Processing an increment of sales tax
The AB 390 Bill last amended on 01/04/09 is concurrently in the headlines with the ballot petition for legalizing and taxing marijuana in California for adults older than 21. There were more than 700,000 signatures to qualify the measure for the November 2010 ballot. Look to California this fall to see if they can legalize their way out of deficit. Taxing marijuana concurrently with a windfall tax on snack foods may be a future opportunity for revenue forecasting research.