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What Will Pot Legalization Cost San Diego?

Medical marijuana clone plants are shown at a medical marijuana dispensary in Oakland, Feb. 1, 2011.
Associated Press
Medical marijuana clone plants are shown at a medical marijuana dispensary in Oakland, Feb. 1, 2011.

What Will Pot Legalization Cost San Diego?
Estimates are difficult to make for how much legalizing marijuana will cost San Diego and how much revenue a local pot tax, Measure N, will generate.
What Will Pot Legalization Cost San Diego?
What Will Pot Legalization Cost San Diego? GUEST: Andrew Bowen, metro reporter, KPBS News

Just how much money would San Diego make from attacks on legal recreational marijuana? The independent budget analysis is out with the tax on pot, that could amount to quite a bit. That is if voters approve it in November and they also approved a measure to add the tax. Metro reporter Andrew Bowen joins us to explain. The cities analyst says the city's proposed tax Measure N could bring in 22,000,000 in the first year and 35,000,000 in the second year . What are those based on? They are based on sales of recreational marijuana in Denver, which is had legal pot since 2014. It's half the size of San Diego, it's a pretty rudimentary gas. It's difficult to get a picture of how much demand is in San Diego right now for recreational marijuana. It's worth noting, Denver does have much more liberal laws on where you can buy it. San Diego's are fairly restrictive and they only apply to medical marijuana. How much money the city gains depends on how easy it is or how easy the city makes it, for people to actually buy marijuana. We would that money that the city gains go? What would a pay for? It would go into the city's general fund, which covers a wide array of city services including the Police Department, code compliance and library and road repairs. Councilman Marc Courson -- Mark Kersey, says of the costs the general fund is the race -- correct place for the money to go. He also said, if it ends up filling potholes are things for libraries, because the cost associated with hot our lesson we expect. It's not the purpose, the purpose of the tax is to pay for the impacts of legalization. Is there an estimate on the cost if the city legalize recreational marijuana? Not really. There are figures out there for Colorado, it's Apple -- apples and oranges comparison, we don't have a clear picture of how much or how many people are purchasing it illegally or how many would be doing it legally. It's a gray area. If approved, Measure N would go into effect if voters choose to legalize marijuana. Doesn't that included tax? Yes. Several taxes, in fact. It's a $9.25 tax per ounce of dried marijuana flower, $2.75 tax on leave and that's for cultivation and there is a 15% special excise tax on sales, medical and nonmedical. And there's the regular state sales tax and local state taxes which is a percent in San Diego. It several layers of taxes that are on this. The state money would go to several sources, one interestingly enough would come directly back in form of a grant to UC San Diego and their center for research on medical cannabis. It would be to continue studying the effects of medical marijuana. The rest of the money would go to a number of different things. Many would go to youth programs, to prevent and treat substance abuse. Environmental cleanup -- cleanup from growth, grants for communities affected by the druglords, things like job placement centers, it would go to different things. It would go to different things and you are saying it would trickle down to San Diego. Local governments can apply for grants, basically. It's up to the cities themselves, whether they want to apply for those grants and how competitive they are will be determined by how much money the state raised, through legalization. Either way, Councilman Kersey tell me he was not optimistic. LA and the bay area get most of that money. San Diego is left out looking for scraps. I don't anticipate we will see a lot of that money, maybe we will get some but it won't be very much. I don't think it will be anywhere close to what we need to cover the city's costs. Andrew, how is it worked in other states that have legalize pot back says legalizing marijuana been a monetary boom for states like Colorado? It's been quite lucrative. In Colorado in 2015, sales of recreational pot were just under $1,000,000,000. That brought in $135,000,000 in taxes and fees. California, is seven times the population of Colorado. It is already the biggest market for cannabis in the country. Just medical marijuana right back Marijuana in general I believe. There is little doubt that sales in California were surpassed Colorado quickly if not right away. Colorado wins voted last year on a tax refund that would take some of this pot money and give it back to taxpayers. Voters decided know they want the state to keep it and they have been spending and on schools to programs for homelessness. I've been speaking with Andrew Bowen, KPBS Metro reporter. Thank you very much. Coming up, the effort to identify people crossing I'd -- illegally who have lost their lives in the Arizona desert. You are listening to KPBS Midday Edition

San Diego voters will be deciding on two marijuana measures on the November ballot: Proposition 64, which would legalize recreational pot statewide; and Measure N, which would impose a 5 percent tax on sales of non-medical pot if it's legalized.

The city's Independent Budget Analyst last week estimated Measure N could generate $22 million in its first year and $35 million in the second year, when the tax rate would jump to 8 percent. The estimates were based on legal pot sales in Denver, which has roughly half the population of San Diego.


That money is meant to pay for the costs associated with marijuana legalization, said Measure N's architect, City Councilman Mark Kersey. He acknowledged there's not a reliable estimate for how high those costs would be, but he said the city should be prepared.

"We don't want to all of a sudden see all these costs and then have to figure out how we're going to handle them," Kersey said. "It's really a situation of trying to be prudent, proactive, getting out ahead of this before it becomes a real problem for the city."

The state Legislative Analyst's Office says Proposition 64 would result in both higher costs and higher revenues for state and local governments. For example, county jails and state prisons would have fewer inmates because some actions would no longer be a crime. But the state would also have to spend more money regulating marijuana production and sales.

Proposition 64 would impose a 15 percent excise tax on sales of all marijuana, medical and non-medical, in addition to state and local sales taxes. It would also place a $9.25 tax on every ounce of dried marijuana flower and a $2.75 tax per ounce on dried marijuana leaves.

Some of that money would go directly to San Diego in the form of a $2 million annual grant to UC San Diego's Center for Medicinal Cannabis Research. Other portions of the state revenue would go to drug prevention programs, grants to assist communities most affected by past drug policies, environmental clean-up of illegal grow operations and grants to local governments to pay for public health and safety impacts.


Kersey said he does not expect much of the money would reach city coffers.

"The way we typically see these things work is LA and the Bay Area get most of that money, and San Diego is kind of left looking for scraps," he said. "It's just not going to be anywhere close to what we need to actually cover the city's costs."

Legalization would be a net gain for state and local governments, the Legislative Analyst's Office predicted. But that revenue would be lower in the first few years as the state begins to issue pot shop licenses and those businesses start to get off the ground.

Pot tax revenue in Colorado has exceeded expectations, and voters last year rejected a measure that would have given refunds to taxpayers. Much of the money is being spent on schools.

In San Diego, Measure N revenues would go into the city's general fund, which Councilwoman Marti Emerald called a "black hole" when she voted against placing the measure on the ballot. Kersey said the general fund is the right place for the tax money because it pays for police and code compliance.

He said if the costs of legalization aren't as high as he fears, that extra money could still help the city in other ways. But, Kersey said, the point of the measure is to ensure the city is well prepared.