California’s economy, the sixth largest in the world, could receive a $5 billion boost from legal recreational marijuana sales, according to a new state-sponsored study.

The study, as reported by the Los Angeles Times, projects that the share of illegal sales will decline from 75 percent of the total market to 29.5 percent after the legal framework goes into effect. California is expected to issue the first licenses to recreational marijuana businesses at the top of next year.

California’s Bureau of Marijuana Control commissioned the study, which was conducted by the University of California’s Agricultural Issues Center. The study examined the expected impact of Prop 64, which legalized recreational marijuana throughout the state in November, on California’s marijuana market.

According to the LA Times, recreational marijuana use will make up over 61 percent of the overall market. However, the costs associated with legal regulations–legal marijuana will be taxed at 15 percent–will encourage people to, at least initially, remain in the illegal market. Still, for a variety of reasons, a large chunk of Californians are expected to shift to the legal, regulated market for their pot fix.

The study said:

We projected that when legally allowed, slightly more than half of the demand currently in the illegal adult-use segment will quickly move to the legal adult-use segment to avoid the inconvenience, stigma, and legal risks of buying from an unlicensed seller.

According to Lori Ajax, the director of the Bureau of Marijuana Control, the nearly 30 percent of people projected to resist the legal market will eventually enter the regulated marketplace.

“It’s going to take some time,” Ajax told the LA Times. “While it’s unlikely that everyone will come into the regulated market on Day One, we plan to continue working with stakeholders as we move forward to increase participation over time.”

Legalization will also affect the medical cannabis market; legal medical marijuana sales will drop from 25 percent of the market to 9 percent, or from $2.6 billion to $600 million, the study found. As fewer people need to obtain a medical marijuana license, more will simply purchase cannabis through the regulated market.

“Revenues for medical cannabis in Washington State, for instance, fell by one-third in the first year after the legal adult-use cannabis system took effect, and by more subsequently,” the study said.

Some who are opposed to California’s legalization effort see the study, and its finding that 29.5 percent of people will still purchase pot from the black market, as justification that a legal market is little more than a smokescreen.

“We have seen this in other states too, that the legal market is easily undercut by the well-established underground market,” Kevin Sabet, president of Smart Approaches to Marijuana, which opposes legalization of the drug, told the LA Times. “This is unsurprising. It is just one more unrealized promise from the marijuana industry.”

But the study pointed to another potential boon to California’s economy that legalization might provide: marijuana tourism. The study found:

Given that adult-use cannabis remains illegal in most other states, California’s legalized adult-use industry may attract some new visitors whose primary reason for visiting the state is cannabis tourism, as has been observed in Colorado.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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Some convicts in California who have been charged with marijuana-related felonies are seeing their fortunes change with the state’s passage of Prop 64 last November. According to partial state data, since the ballot measure passed legalizing recreational marijuana in California, thousands of people charged with felonies for marijuana-related crimes filed requests to reduce their sentences from a felony to a misdemeanor.

Many have been granted a sentence reduction–and some first-time offenders have seen their records expunged.

California voters overwhelmingly backed Prop 64 in the November election, with 57 percent, or nearly eight million people, supporting it. While its main purpose was to legalize recreational marijuana in California, the first state to legalize medical marijuana in 1996, Prop 64 contained an equally impactful clause for people who had been charged with marijuana-related felonies under the previous sentencing laws.

Prop 64, according to the measure’s language, “authorizes resentencing and destruction of records for prior marijuana convictions.” People have been taking advantage of that overlooked part of the measure. Through March, 2,500 requests were filed to reduce sentences from felony charges to misdemeanors, according to the partial state data.

Bruce Margolin, an attorney that has worked with a number of people seeking to reduce their marijuana-related charges, told an NBC affiliate in Los Angeles that judges and prosecutors “were totally unprepared” for the flood of reduction requests since Prop 64 passed. “It’s amazing,” he added. “You would have thought they should have had seminars to get them up to speed so we don’t have to go through the process of arguing things that are obvious, but we’re still getting that.”

Prop 64 is not the only ballot measure in California that allows nonviolent offenders with marijuana-related felony charges to seek a reduced–or completely expunged–sentence.

In November 2014, California passed Prop 47, which “allows people who are already serving a felony conviction for [a marijuana crime] to petition in the court for resentencing.” For convicts who have already completed their sentence, Prop 47 permitted them “to file an application before the trial court to have the felony conviction reduced to a misdemeanor.”

San Diego County is leading the charge in reducing marijuana-related sentences, according to Rachel Solov, who works in the district attorney’s office in San Diego. She told NBC that 400 people in San Diego have already had their sentences reduced, which she said is “the right thing to do.” Solov added: “If someone’s in custody and they shouldn’t be in custody anymore, we have an obligation to address that.”

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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It’s probably safe to say that the creators of California’s Prop 64 probably didn’t intend to cost the state millions–before earning it billions–with the legalization of recreational marijuana. But that’s exactly what may have happened thanks to a legislative blunder that will give medical marijuana patients a lengthy tax holiday.

Prop 64 was designed to apply a 15 percent excise tax to all recreational and medical marijuana sales starting January 1, 2018. The excise tax would be tacked onto a 7.5 percent sales tax for recreational marijuana, but Prop 64 repealed that tax for medical marijuana.

According to the Washington Post, the tax exemption was intended to give medical marijuana users a tax break beginning in 2018, but the January 1, 2018 target date was regrettably omitted from the 62-page initiative. Therefore, the tax exemption went into effect this week once the initiative passed. The initiative’s creators argued that it wasn’t their intention to grant a 14-month tax holiday to medical marijuana users, but California’s Board of Equalization ruled otherwise.

“The resulting revenue loss for 2017 is estimated to be as much as $49.5 million,” said board member Jerome Horton, citing the total tax revenue collected from 1,632 dispensaries in 2014. “Local cities who anticipate preserving their revenue from medical marijuana may get nothing since Proposition 64 provides for a complete exemption from medical marijuana.”

There are precedents for ignoring legal provisions that clearly contain clerical errors, but the Board didn’t see fit to invoke them. That means the provision is legally binding, despite its financial implications.

This marijuana loophole has many people who were interested in using recreational weed considering medical marijuana cards as a more cost-effective alternative.

David Goldman, a medical marijuana patient and president of the Brownie Mary Democratic Club–the first politically affiliated Cannabis club in California–told the San Francisco Chronicle that he intends to keep using his medical card despite Prop 64 being passed.

“I purposely renewed my registration this month,” said Goldman. “If you spend more than $100 on cannabis in a month, you will probably do better if you get the state card.”

In order to become a medical marijuana patient in California, individuals must first obtain a recommendation from a doctor before applying for a Medical Marijuana Identification Card or MMIC with the California Department of Public Health, which includes a $100 fee.

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

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Marijuana legalization is set to be one of the biggest ballot measure topics to watch in this election, as nine states are ready to vote on legalizing recreational or medical marijuana in less than a week. In California, a host of artists, including Pusha T, have rallied to show support for Prop 64, which could legalize the recreational use of marijuana for adults aged 21 years or older.

Pusha T filmed a PSA Tuesday announcing his support for the proposition, claiming “[legalizing weed] is an important step in ending mass incarceration across the country.”

The rapper, who doubles as president of Kanye West’s G.O.O.D. Music record label, considers marijuana arrests to be the driving force behind the antiquated War on Drugs and a top reason for recidivism, or relapse, in the nation’s justice system.

Watch Pusha T’s PSA Supporting Prop 64

Pusha T joins actress Shailene Woodley, music mogul Jay Z, rapper and actor Common, comedian Sarah Silverman, and many others in supporting the measure as part of the celebrity coalition Artists for 64.

“I’m not a California voter, but I know when good legislation passes in the biggest state, other states follow,” said Pusha T. “That’s an important step in ending mass incarceration around the country.”

The topic of mass incarceration appears to be of great importance to the rapper, who recently spoke about its rates and the rights of ex-felons with Stephen Colbert, after campaigning in Florida for Hillary Clinton with vice presidential candidate Tim Kaine.

Prop 64 would also create two new taxes, according to Ballotpedia. That revenue would be “spent on drug research, treatment, and enforcement, health and safety grants addressing marijuana, youth programs, and preventing environmental damage resulting from illegal marijuana production.”

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

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