Marijuana Expected To Be California's Largest "Sin Tax" As Jerry Brown Set To Release Surplus Budget

California Governor Jerry Brown will release his final state budget tomorrow for the 2018-2019 fiscal year which will include, for the first time, tax revenue from weed sales.  As Reuters  notes this morning, Brown and state lawmakers have 'high' expectations for the new revenue stream which is expected to reach $1 billion over the next couple of years.  Meanwhile, if the estimates are even directionally accurate, the pot tax will be the largest "sin tax" collected in California at over 2.5x the revenue collected from the sale of booze (chart below per the 2017-2018 California budget).

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Brown's final budget is expected to show a $7.5 billion surplus on roughly $125 billion in annual expenditures...

The estimated budget surplus of $7.5 billion is a far cry from the $27 billion hole that was projected as Brown took the reins for his third term in January 2011. He had previously served as governor from 1975 to 1983.

For the current fiscal year, the state budget topped $125 billion in general fund spending and nearing $200 billion when funds from the federal government, bond sales and other sources are considered, state records show. California has the sixth-largest economy in the world and is the most populous U.S. state, spending $53 billion from its general fund budget for K-12 education, $15 billion for state colleges and universities, and $35 billion for health and human services in fiscal year 2017-2018.

...which is primarily spent on education ($68 billion), Health and Human Services ($35 billion) and, of course, the state's massive prison system ($11 billion).

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Meanwhile, as the Sacramento Bee notes, Brown's new budget will also reflect efforts to circumvent Trump's new federal tax law by allowing California residents to report their state taxes as if they were "charitable contributions."

Gov. Brown blasted the new tax law while Republicans advanced it, calling it “evil in the extreme.” He charged that the law favored corporations over low-income Americans and seemed to single out his state by striking a popular state and local tax deduction that some 6 million Californians claimed last year.

Brown could use his budget to strike back by signaling his intent to adjust California tax laws in a way that would let residents claim new deductions on the federal returns.

One proposal, already submitted in a bill by state Senate President Kevin de León, would let Californians report their state taxes as if they were charitable contributions, allowing residents to deduct those taxes on their IRS returns. Another more complicated idea floated by tax experts would have California shift its personal income tax to a different employer tax that businesses could deduct.

Of course, Cali democrats who are celebrating their surplus budget may want to take a step back and put the magnitude of their "accomplishment" into perspective...

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Comments

Miggy rrrr Wed, 01/10/2018 - 22:31 Permalink

Nobody is debating the harmless nature of cannibas. It effects people differently, that we should be able to agree on. The point is the weed is already on every street corner and has been for a very long time.

So now the question is as a society: Do we continue to throw billions at a losing "war" only enriching "sin" industries like prisons and more importantly effecting peoples lives forever with a criminal record for trying a joint? Or do we legalize it and use the revenue to educate the young on the potential dangers and allow them to make their own mind up and in the process bringing in money that is already being spent but now enriching some very bad people?

 

The people have spoken.

In reply to by rrrr

Antifaschistische knukles Wed, 01/10/2018 - 20:50 Permalink

CA State Debt = $425,000,000,000  (thats 425 Billion)

raising an extra B here and there...ain't going to matter.

...and I'm as libertarian as they get, but let's talk about associated healthcare costs along with that.  Or, is our position that smoking pot will keep people from seeking conventional healthcare.  lol.

...I would like for a cigarette tax fund to be created so that insurance companies can reclaim payouts for lung cancer dudes who smoked 40 years.  

...oh yah, I'm for freedom...freedom to do whatever we want to do, as long as someone else pays for the consequences. 

In reply to by knukles

Miggy Antifaschistische Wed, 01/10/2018 - 22:44 Permalink

I have seen too many documentaries and read too many articles of people getting much, much better from ailments like seizures and Lou Gehrig's disease to know that cannibas has some really, really good medicinal qualities so I do believe pot will keep people from seeking conventional healthcare, especially with deductibles and co-pays. More importantly they have a much better alternative to their health issues.

It's not just raising the extra billion here and there as you put it. It is the expense savings of enforcement both on the street and in the courts. Don't forget the alternative industries that will be paying taxes like packaging, etc.

The status quo on cannibas has failed and the people have spoken. Legalize and regulate it. A much better alternative.

 

 

In reply to by Antifaschistische

edotabin knukles Wed, 01/10/2018 - 22:46 Permalink

Naturally the black market will thrive. Even if the do get them they'll squander those as well and then they'll need the cocaine tax, the LSD tax whatever........

In the beginning there were no taxes. Then they started taxing things. Budgets in the red, always in the red. Until people realize they are on a hamster wheel nothing will ever change.

 

In reply to by knukles

jaxville greenskeeper carl Wed, 01/10/2018 - 20:32 Permalink

  Lets pretend the pot tax yields create a real surplus.  No mention of unfunded liabilities such as pensions but we are pretending.

  With the tax in place and most growing and distribution handled by the regular "you know whooos" what will it cost the consumer?

  If individuals are allowed to grow it, it won't be long before they have both quality buds and a surplus to their needs.  They can sell their surplus for considerably less than licensed operators. 

    I would guess no more than eight years before grey market (tax exempt) bud causes tax revenue to decline.  Maybe sooner if the economy rolls over creating incentive to get a garden happening.

  If they could not control illegal black market pot, what on earth makes them think the can control it if it is legalized?

  I would also suspect within two or three years any unlicensed production, no matter how minor will be prohibited. 

In reply to by greenskeeper carl

GUS100CORRINA nmewn Wed, 01/10/2018 - 20:24 Permalink

SORRY .... But I DO NOT BELIEVE any of the numbers. 

FIGURES can LIE and LIARS can FIGURE. An honest, competent outside source needs to AUDIT these numbers and ASSUMPTIONS.

I suspect the ASSUMPTIONS were modified to create the desired result.

There is NOT ONE HONEST RED BLOOD CELL in Governor "Moonbeam".

In reply to by nmewn

Ex-Oligarch nmewn Wed, 01/10/2018 - 20:26 Permalink

I have it on good authority that pot is very, very, very easy to grow in California.

Even the most slack-assed stoner can do it. 

Putting some plants in the yard or up on your balcony probably requires less effort over the long haul than heading off to the shop whenever supplies run low. 

Wonder if that was taken into account in the tax revenue projections?

In reply to by nmewn

jaxville Ex-Oligarch Wed, 01/10/2018 - 20:39 Permalink

  Big tax revenue for the first couple of years.  The revenue growth curve starts to flatten after three or four years.  No more than eight years before it plummets.

 The enlightened state will surely prohibit all but licensed production before then.

  I knew an outdoor grower from Humboldt California who told me over a pound of premium dried bud per plant.

In reply to by Ex-Oligarch

Hongcha Wed, 01/10/2018 - 19:54 Permalink

For you high-volume tokers in Kali ... Craigslist search for-sale 'PROP 215'.

For lightweights such as myself ... cannabis still a wonderful, natural bargain vis-a-vis my ETOH days.

Kali, don't fuck this up too.