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California’s new ‘pot’ of gold

July 31, 2010

Caitriona Palmer reports from Los Angeles on how the unlikeliest of weeds may soon be helping the cash-strapped Golden State beat the recession

Saturday July 31 2010

Reeling from the effects of a lingering global recession, the economy of California has gone to pot. So innovative lawmakers in the Golden State have come up with a novel way to pull the world’s eighth largest economy away from the brink of a financial meltdown: by legalising the sale and use of cannabis.

In November voters in California will be asked to consider Proposition 19, a law that would legalise possession and cultivation of a small amount of cannabis for personal use.

Last week in Oakland, local government officials passed a resolution that would allow the licensing of four huge cannabis factories, making the city in northern California the world’s first industrialised pot zone.

The planned factories — each bigger than a football pitch — would house over 50,000 cannabis plants and state-of-the-art facilities to harvest, dry and package the weed, in addition to the production of a variety of cannabis spin-off products including hash cookies and massage oils.

For cash-strapped officials eager to replenish empty coffers across America, a new realisation is dawning: pot equals big bucks.

Potheads can thank the global recession for this sudden change of heart. With many states suffering massive budget deficits, officials are realising that taxing the sale of marijuana could bring in millions of dollars in annual revenue.

Now taxing the sale of marijuana seems as tempting to American politicians as the movement to end Prohibition was in the 1930s.

“The issue has become seductive in a way that perhaps it had not been before,” said Tom Ammiano, a member of the California state assembly and a proponent of legalisation. “People see their schools closing, they see furlough days and reduced health care, and then they see this $1.4bn industry that’s untaxed and unregulated.”

Even California’s lame duck governor, former actor Arnold Schwarzenegger — the man who many Californians blame for the state’s dire economic morass — has conceded that legalising marijuana might help revive California’s sluggish economy.

The ‘governator’ — who said that he smoked pot as a young man in the seventies — announced last year that it was “time for debate” on the legalisation of marijuana.

After nearly six years in office, California’s state budget deficit under Schwarzenegger hovers around $20bn — despite drastic public spending cuts over the past two years — and his approval rating has sunk below 25pc. Earlier this month state employees and vendors for the first time received IOUs instead of their usual paycheques.

This week when I drove from Los Angeles to Santa Barbara, evidence of California’s empty bank account could be seen in the potholed freeways and crumbling bridges along Interstate 101.

Foreclosure signs are still commonplace — especially in the wealthy beach communities of Santa Barbara where many dotcom and investment millionaires have homes. The proposed legislation to legalise marijuana across California could potentially bring in more than $1bn a year to the state, said State Assemblyman Ammiano, and ease some of the pressure on the growing deficit.

“Think of all the pot smokers out there,” said a 30-something Californian woman who favours legalisation. “They can bail California out of its deficit. Smoke more pot!”

Under the legislation, any person in California over the age of 21 could possess an ounce (28g) of marijuana and cultivate the drug for personal use in a plot no larger than two square metres.

Should other states across America follow suit, economists suggest that over $7bn could be raised annually through ‘pot revenue’ while an additional $13.5bn could be saved in police and judicial costs — particularly the annual costs of sending tens of thousands of non-violent marijuana users to jail. But opponents say that legalising pot will only cause more social problems, raise health-care costs and potentially put millions of recreational takers on a lethal slide towards crack and cocaine.

“What message does legalising marijuana send?” asked a teenage student in Washington state before a preliminary vote earlier this year on whether pot should be sold in liquor stores. “That you’re willing to gamble our future for a little tax revenue?”

With the mid-term elections looming in November, some politicians also hope that by endorsing the ‘pot vote’, they may grab the attention of young voters — who are also partial to a joint or two.

But this strategy can have its drawbacks. Some analysts suggest that the danger for any politician courting young people by backing legalisation of pot is that they may be too lazy — or stoned — to vote for it.

Supporters of the bill point to the millions of dollars in tax revenue that California already collects from medical marijuana, which has been legally available since 1996 for those suffering from a range of conditions, including multiple sclerosis, insomnia and chronic pain.

If Californians are willing to spend $200 they can get a prescription from a local doctor for ‘Super Silver Haze’ or ‘Purple Trainwreck’, and access one of an estimated 2,100 medical marijuana dispensaries, wellness clinics or taxi services across the state who will deliver the drug of choice to their door.

This medical ‘cannabusiness’ earns the city of Oakland an annual turnover of $28m through tax revenue. The city is now bidding to become the new Silicon Valley of cannabis cultivation, with the recent council vote approval to open four super cannabis factories.

Pot is currently illegal in the United States but there has been a significant relaxing of the laws in the past decade. The Obama administration has openly said that it will leave the medical marijuana clinics alone — as long as they play by the rules.

Even the president has admitted to smoking pot in the past. When asked by reporters if he had inhaled he retorted, “I thought that was the point.” But experts say that it is still unclear whether the federal government would step in should states begin to legalise the drug on their own.

But across America, the balance seems to be tipping in favour of those who want to treat marijuana like alcohol or cigarettes: as a drug to be licensed, taxed and sold under state supervision.

“We’re one step closer to ending cannabis prohibition and the unjust laws that lock people up for cannabis while alcohol is not only sold openly but advertised on television to kids every day,” said Richard Lee, a pot enthusiast and entrepreneur who led the Proposition 19 initiative in California.

A poll last year showed that 56pc of Californian voters support legalising pot and taxing its proceeds as a means to stemming the state’s financial mess, and that more than 70pc of Americans favour the use of medical cannabis.

All eyes — Democratic and Republican alike — are now on California.

If California votes to lift the ban on pot then the tide of legalisation may sweep across the US. Come 2011 it may not be just California but other cash-strapped states who will be finding their pot of gold at the end of the electoral rainbow.

Irish Independent

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