California becomes the fifth U.S. state to legalize recreational marijuana after voters approved Proposition 64.
Voters in California approved Proposition 64, a ballot initiative that legalizes marijuana for recreational use. Voters passed the law with 56 percent support versus 44 percent against with 99 percent reporting. California is now the fifth state to end prohibition in the United States.
Under Proposition 64, also commonly referred to as the Adult Use of Marijuana Act, adults ages 21 and over are legally allowed to possess and transport up to one ounce of marijuana for personal use. The law also allows the cultivation of up to six cannabis plants.
Adults will be allowed to smoke marijuana in a private home or at a business licensed for on-site marijuana consumption, but smoking while driving or in public remains illegal. Cities and counties have the option of imposing bans and blocking marijuana retailers.
A report published earlier this year by Arcview Market Research and New Frontier projects that California will pull in $1.6 billion in recreational sales in the first full year of legalization, with the market growing at a rate of 18.5 percent. California is already the largest U.S. cannabis market, despite up until now only having legalized medical marijuana, and the market research firm estimates that the state’s marijuana market will be worth $6.46 billion by the year 2020.
The law imposes a cultivation tax of $9.25 per ounce for flower and $2.75 per ounce for leaves, as well as a 15 percent sales tax. Revenue, estimated to be at least $1 billion annually, will be allocated to covering costs for regulating the measure, furthering research into cannabis’ medicinal properties, financing law enforcement and supporting substance abuse treatment groups and mental health organizations. Local jurisdictions are also allowed to add taxes of their own.
Marijuana remains an illegal substance under federal law. The Drug Enforcement Administration declined to reclassify cannabis under the Controlled Substances Act this summer. Because of marijuana’s federal status, U.S. banks have so far refrained from doing business with marijuana-related businesses, forcing sellers and dispensaries to operate as cash-only establishments.
Already the sixth largest economy in the world, California’s move could make a significant influence on legalization efforts throughout the rest of the United States. Adult use marijuana is now legal along the entire West Coast. Jessica Rabe, research associate at the global brokerage company Convergex, told Forbes that California’s legal adult use market “will put pressure on the government to reclassify or deschedule the drug to help ‘cannabusinesses’ better conduct their operations with more access to banking services.”
Polls had indicated that California voters would approve the legalization measure. Nearly two-thirds of Californians responded in favor of Proposition 64 in a survey conducted by the Institute of Governmental Studies (IGS) at University of California-Berkeley in September.
Proposition 64 qualified for this year’s ballot in July. The measure had the support of Lieutenant Governor Gavin Newsome, U.S. Rep. Nancy Pelosi, Senator Bernie Sanders, and Napster founder Sean Parker. California’s two largest newspapers, the Los Angeles Times and the San Francisco Chronicle, also endorsed the measure.
This is third time Californians had the opportunity to legalize recreational marijuana. Most recently voters rejected an adult use measure in 2010, with Proposition 19 being voted down by 54 percent of voters.