GUY RAZ, host:
On the other side of the country, in California, some folks are rallying for a different reason: to legalize pot. On Tuesday, voters in the state will consider Proposition 19. And if it passes, it would allow local jurisdictions to essentially make their own rules governing the use of and sale of marijuana.
Now, one of the main arguments supporters make is that it will undercut Mexican drug cartels and in turn, decrease violent crime. But a study by the RAND Corporation's Drug Policy Research Center argues that those cartels won't likely be affected all that much.
Beau Kilmer was the lead author of that study, looking into the issues surrounding Proposition 19.
Mr. BEAU KILMER (Co-Director, RAND Drug Policy Research Center): The proposition does three different things. If it passes, anyone throughout the state of California, if you're 21 or older, you'll be able to posses up to an ounce. The second piece of this is that if it passes, anyone who's 21 and older can actually grow their own, 5-by-5 pot on their private property. And the third piece is that if it passes, it gives the local jurisdictions in California the discretion to make decisions about production, distribution and taxation.
RAZ: How much do you believe the price of marijuana will drop if Proposition 19 passes on Tuesday?
Mr. KILMER: Right now, if you're only getting an ounce of sensimilla - kind of the good stuff - in California, that'll run you between $250 to $400 an ounce.
RAZ: An ounce.
Mr. KILMER: Yeah. We calculated that after legalization, one could expect the pre-tax price to drop by at least 80 percent.
RAZ: Wow. Now, one of the arguments that proponents of Prop 19 have been making is that if it is passed, if marijuana is effectively legalized, taxed and so on in California, it will severely undercut the profits made by drug cartels on marijuana, particularly Mexican drug cartels. Your study found that that's not entirely true, right?
Mr. KILMER: Yeah. Well, the first point is that the claim that the Mexican drug cartels earned 60 percent of their drug export revenues for marijuana, should not be taken seriously.
RAZ: That's a government claim that was made in 2006, I should add.
Mr. KILMER: Our estimate suggests that the actual figure is much lower. And it probably only accounts for 15 to 26 percent of their total drug export running.
RAZ: So drug cartels in Mexico are earning the rest on other drugs that they're sending to the U.S.
Mr. KILMER: Yeah, on cocaine, heroin and methamphetamine.
Mr. KILMER: And so, kind of the second point - or the second finding in the study is that we find that if Proposition 19 only influences the marijuana trade in California, it's not going to have much of an impact on the overall cartel drug export revenues.
You realize that California only accounts for about one-seventh of the marijuana consumed in the United States. In California, we have a strong domestic production. So we calculated that if Proposition 19 passes and it only influences California, it's only going to reduce their drug export revenues by 2 to 4 percent - not a lot.
RAZ: So effectively, the Mexican drug cartels won't really take a big hit. I mean, they'll lose the California market, but they'll still be able to export to the rest of the country.
Mr. KILMER: Well, this comes to the third point. Proposition 19 actually could have an important effect on these cartels. If the high-quality marijuana that's grown in California is smuggled to other states at prices that competes - the marijuana that comes from Mexico - if that happens and the cartels decide that they're not going to export marijuana to the United States anymore, then they could lose between 13 to 23 percent of their drug export revenues.
RAZ: That is significant.
Mr. KILMER: Yeah. But I mean, all of this depends on a number of factors. It would - depends on the response of the federal government. It depends on the responses of the other states. And also, it depends on the tax rates imposed by the local jurisdictions in California.
RAZ: What is the tax going to be on it?
Mr. KILMER: That's the main question. That's a great question. And there really has not been a serious discussion about this.
RAZ: We don't know if it's going to be 2 percent or 5 percent or 7 percent?
Mr. KILMER: No. And one of the things we raise in the report is if the tax rate is set too high, then it will still leave an opportunity for the black market.
Regardless about how you feel about Proposition 19, we really need to start thinking right now about what the optimal tax rates would be. Because the one thing you do have to be concerned with, with the Proposition 19, is that if it passes, it allows each of these local jurisdictions to come up with their own tax rates. So one could even imagine a possible race to the bottom as different jurisdictions lower their tax rates as a way of attracting business.
And so that's something that we need to start thinking right now about - you know, if it does pass, how can we stop this potential race to the bottom?
RAZ: That's Beau Kilmer. He is the co-director of the RAND Drug Policy Research Center. He joined me from San Francisco. Beau Kilmer, thank you so much.
Mr. KILMER: Guy, thanks for having me.
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