California: Wine Industry an example of Marijuana’s Economic Potential

Jan. 10, 2010 (McClatchy-Tribune Regional News delivered by Newstex) — The wine industry is one of California’s shining economic successes. An economic impact study conducted for the state’s Wine Institute in 2006 reported the industry sustains 309,000 full-time jobs that generate $10.1 billion in wages.

Factoring in excise and sales taxes, as well as taxes on corporate profits and income taxes paid by workers, the study concludes the industry provides $3.2 billion in revenue each year to state and local governments. And that’s with the second-lowest excise tax on wine of any state in the nation, just 20 cents a gallon.

To Dale Gieringer, coordinator of the California chapter of the National Organization for the Reform of Marijuana Laws, numbers like that yield a vision of the economic benefits a legal market for marijuana in California might produce.

In a report submitted to the Legislature in October, Gieringer offered these projections:

–An excise tax of $50 per ounce, as proposed in current legislation, would equate to about $1 for each marijuana cigarette, or joint, and yield about $900 million a year.

–Retail sales taxes would produce about $300 million a year.

–A legal marijuana industry would generate total economic activity in the state of about $15 billion.

Ventura attorney James Devine, who represents clients in the existing medical marijuana (OOTC:MJNA) industry, states the vision more poetically.

“Who are my clients? They’re real estate brokers, contractors, people who’ve been hurt by the recession,” he said. “They’re already businesspeople. They want to make money I see fields of cannabis getting us out of a recession.”

Whatever the potential economic development impacts, the dollar signs that proponents of legal marijuana believe will turn people’s heads are in the potential tax revenues.

Richard Lee, the founder of Oakland’s Oaksterdam University and sponsor of a legalize-pot ballot initiative all but certain to qualify for the November ballot, said he decided to pursue the initiative this year after his private polling showed a dramatic shift in public attitudes from just two years ago.

Why did his polls show a shift from opposition to legal marijuana to support?

“Unemployment, city budgets are hurting and the state budget’s a fiasco,” he said.

That’s why he titled his initiative, “The Regulate, Control and Tax Cannabis Act of 2010” and why he named his ballot committee “Tax Cannabis 2010.”

The initiative would give local governments first crack at taxing marijuana, Lee said, but would also allow the Legislature to establish statewide regulations and taxes. It does not cite any specific level of taxation.

A bill by Assemblyman Tom Ammiano, D-San Francisco, specifies a $50 per ounce excise tax on marijuana.

In an analysis of the bill, the Board of Equalization estimates such a tax rate would generate $1.25 billion in annual tax revenue to the state and an additional $120 million in local sales taxes.

That amount of revenue would hardly close the state’s $20 billion budget shortfall, let alone allow for the restoration of cuts made last year. Still, Lee said, he believes there is an obvious constituency for a marijuana tax — students, government workers and recipients of government services who have been hurt by the ongoing budget crisis.

“We expect,” he said, “that there will be a natural alliance with college students who’ve had their tuition raised and their classes cut.”

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