California tax collectors are looking at a new gold rush.
The legalization of recreationalcannabis will likely mean a tax bonanza for the Golden State, which was the first state in the U.S. to approve medical marijuana and joins seven others and the District of Columbia in allowing recreational use after voters decided last month to approve Proposition 64.
The California Board of Equalization approved a proposal this week asking for funds to hire staff in anticipation of 2018 when legalization of recreational use kicks in. Roughly 25,000 cannabis growers are expected to sign up and begin paying taxes, and the board expects to need $20 million by 2021 to support a staff of 114 to oversee to the new industry.
Expert say California could see as much as $1 billion in revenue from the production and legal sale of cannabis even though it remains illegal on the federal level. President-elect Donald Trump recently appointed two prominent opponents of recreational cannabis use to his cabinet, while current President Barack Obama said in a recent Rolling Stone interview that pot should be regulated similar to it is with alcohol and cigarettes.
People who are at least 21 years will be allowed to possess an ounce of pot and grow six plants in their homes. Consumers will pay a 15 percent excise tax on retail sales for both recreational and medical marijuana, and a cultivation tax will be levied on harvested plants on the commercial market.
Colorado, the first state to allow recreational use of marijuana and with a population a seventh the size of California’s, saw tax revenue from both medical and recreational sales reach $14 million in the first month after legalization in 2014.