CITY'S TAX HAUL FROM MARIJUANA IS UNDERWHELMING

It must be the cannabinoids coloring the conversation.

As Californians debate legalizing marijuana through Proposition 19,
proponents have thrown around some astonishing numbers about the value
of the state's weed crop and the potential tax revenue if it were
brought into the mainstream, regulated and subject to the same visits
from the tax man as any other business.

Fourteen billion dollars is one figure commonly circulated number for
the cash value of California's marijuana production -- more than the
state's vast dairy and grape industries put together. And last year,
the state Board of Equalization estimated that legalizing and taxing
marijuana would bring $1.38 billion into the state treasury -- a
tempting sum given the state's vast deficits.

But can you believe that hype? Judging from recent numbers compiled by
the city of Redding, marijuana looks like a far more modest business.

After a wave of openings last year, Redding currently has 18
medical-marijuana co-ops permitted by the Police Department -- which
rivals the number of coffee shops in the city.

Despite the apparent boom, though, actual reported sales aren't huge.
Redding's Finance Department reported last week that the city received
$4,860 in sales-tax revenue from collectives in the first quarter of
this year. Since the city's take is 1 percent of retail sales, that
translates to $486,000 in medical-marijuana sales over three months --
roughly $2 million a year in gross sales spread among nearly 20 shops.

That might add up to a living for the organizers of co-ops, but as
industries go, it's tiny. And if you extrapolate Redding's sales
across the whole state, it comes to $800 million in annual
medical-marijuana sales. That sounds like real money, but the total
sales are less than just the tax revenue that the Board of
Equalization projected if marijuana were legalized.

This obviously isn't comprehensive data. It's just one quarter in one
small city. And it doesn't reflect users who don't even make a
pretense of smoking for medical reasons.

But it's a telling window into a realm where there's been a great deal
of guesstimating but few hard numbers. And what it shows is that the
supposed tax windfall from legal marijuana might be no more tangible
than a puff of smoke.