Students look at unique opportunity behind marijuana sales taxes

Local governments in California are about to be flush with cash from a potentially lucrative source: pot sales. They will also be faced with how to best use that money.

State voters last year approved Proposition 64, which will decriminalize recreational use, establish a state system for taxing marijuana businesses and allow for local regulation and taxation of pot sales. It’s expected to provide hundreds of millions of dollars of new tax revenue to cities and counties throughout the state.

“Every local government is looking at this as a potential funding stream,” said Sheldon Gen, an associate professor at San Francisco State University’s School of Public Affairs and Civic Engagement. “This is such a rare opportunity to have a new source of revenue.”

Four of Gen’s students spent the spring semester looking at how cities and counties responded to the influx of revenue after medical marijuana was legalized in the state in 1996. Jordan Harrison, Kevin Miller, Adam Patterson and Evan Xu ― all of whom are in the Master of Public Administration Program ― read through news articles, regulations, budgets, legislation, information from other states and minutes of local policymaking bodies.

The inclination among most local government officials is to put new taxation in their general fund, with no strings attached, Harrison said. But an outreach effort by advocates could help earmark marijuana taxes for specific children’s programs, she said. The students’ research is aimed at recommending what types of taxes could be implemented, as well as ways for child advocates to frame the issue when approaching local government officials.

The students came up with a laundry list of community services that could receive dedicated funding from marijuana taxation: Childcare, family support, preschool, afterschool and mental health programs. These are services with an established record of positive returns on public investments, as summarized in a report by another team of MPA students that worked in parallel to this one.

The research was conducted in partnership with Funding the Next Generation, a nonprofit that seeks to promote dedicated funds for children in California cities and counties. The organization is led by SF State Lecturer Margaret Brodkin, who was instrumental in the 1990s in establishing a funding stream for children’s programs in San Francisco.

Harrison said the research was a great opportunity to use the skills they learned in Gen’s Policy Process and Civic Engagement class.

“I know a lot of local governments are challenged by the fast pace of legislative change,” she said. “This is going to be an ongoing issue for California for a long time. Cities are going to need strong leadership from their city council members and managers to set aside the revenue for their children’s services.”

Gen said associated health issues and other linkages to child welfare that come with marijuana legalization make this a reasonable target for revenue for children’s programs.

“But the overriding issue is that it’s money on the table,” he said.