The California Legislative Analyst’s Office released this week its review of a potential ballot initiative to legalize psychoactives. It outlines not only its policy implications, but also its possible fiscal impacts on California – which the report describes as “various” or “uncertain”.
‘s supporters submitted final language for the measure earlier this month . The measure would allow adults to grow, possess, and use substances such as psilocybin and LSD. To purchase psychedelics in regulated stores, a person would require a doctor’s recommendation.
The Psychedelic Wellness and Healing Initiative of 2020 refers to substances and plants that are “entheogenic”, and cannabis is one of them.
The LAO’s review found that this approach could result in hundreds of millions in lost tax revenue if it impacts the existing marijuana market in the state.
The report states that “if the interpretation and application of the measure cause a large portion of cannabis businesses to move from the legal cannabis market into the new market created through the measure, it could result in hundreds of millions in tax revenue related to cannabis.”
LAO said that the change may actually lead to higher revenues for the state.
The office stated that “if there is no such shift, then the measure could result a net increase of tax revenue” as people who are currently selling illegal entheogenic substances or plants, or providing services related to them, could start doing so under state law, and pay personal income and sales taxes.
Analysts have noted that, despite the fact that tax revenues could increase, they “would be significantly lower than what is currently expected.”
We have reviewed, in accordance with Elections Code Section 905 the proposed statutory initiatives related to cannabis and some psychedelics drugs (A.G. File No. File No. https://t.co/zIXQIa8BVv
Legislative Analyst December 18, 2020
LAO stated that the proposed limitations on taxes, regulations, and other restrictions authorities can place on entheogenic activities and businesses could cause state and local regulatory expenses to exceed revenue by over $100 million per year.
The report explains that this could occur if many existing cannabis businesses decide to become entheogenic and the measure is interpreted and implemented so as to continue to require the same level of regulation while limiting regulatory fees agencies are allowed to charge. The report explains that if fee revenues do not cover the full cost of such businesses, other funding sources may be required (such as state General Funds).
LAO concluded that changes to the legal penalties and enforcement of law around psychedelics would save money for the state by reducing costs associated with policing and incarceration.
The report states that the measure will reduce the ongoing costs for the state and local government by reducing both the number of people convicted and incarcerated under state prisons and county jails, and the number who are placed under community supervision. The measure would result in a decrease in state and county costs for the enforcement and handling of criminal cases related to entheogenic substance offenses in the state courts system.
LAO stated that the savings would take time to accumulate and ultimately would result in relatively small cost savings. The office said that any savings would be used elsewhere in the criminal justice system.
The report states that “in the short term, these savings may be offset partially or even more by increased costs for state and local governments due to the workload associated with the resentencing of people convicted of crimes affected and the changing of criminal records of those previously convicted.” We estimate that this measure will eventually lead to a net cost reduction of a few millions dollars per year. These resources could be used to support other activities such as law enforcement, corrections and courts.
These are the other changes proposed under the proposed Psychedelic Well-being and Healing initiative
- The simple use and possession at home of psychedelics would be legalized. This change would be applicable to all “hallucinogenic drugs” identified by California law. These include DMT, LSD mescaline psilocybin psilocyn MDMA.
- Adults can possess as much entheogenic substance for their own personal use in a year.
- The cultivation of psychedelic fungi and plants on private property would be legal, provided that it is done in secret and with the consent of its owner. The proposal also limits the ability of state and local authorities to prohibit cultivation by using nuisance laws or “impracticable regulations”.
- Starting January 1, 2025 any entheogenic company can begin to cultivate, manufacture, or distribute psychedelics if it is located on land zoned commercial agriculture and has been approved by the California Department of Food and Agriculture as a food production site.
- Starting April 19, 2025 any California-based business with a state seller permit, which is required for most retail businesses, can begin selling psychedelics to patients who are qualified or their designated caregivers.
- The proposal states that “this Article shall not prevent any church or spiritual organization or indigenous group from using entheogenic substances or plants as a sacrament for their own religious or Spiritual practice”. Definitions of such practices aren’t provided.
- If local voters approve, a municipal sales tax of up 10 percent can be applied to products containing psychedelics that are sold for medical and therapeutic purposes.
- The sale or use or endangered species or parts thereof will not be permitted “unless the producer is able to demonstrate that the species was produced in a sustainable manner and not harvested from the wild”, and it does not adversely affect the species’ natural habitat.
- Doctors could prescribe psychedelics to treat any “physical or psychological illness” that the substance can relieve. Specific conditions include: PTSD (post-traumatic stress disorder), depression, anxiety disorders, addictions, suicidality and spiritual development.
- No healthcare professional would be “punished or denied any rights or privileges for having recommended entheogenic substances or plants.”
- The Department of Public Health of the state could issue regulations to implement state frameworks, but “the rulemaking procedure shall not unreasonable delay implementation.”
- Businesses will be regulated as closely as possible to agriculturally produced non-psychoactive products, with the exception that warning labels in English or Spanish would be required for psychedelic packaging.
- The state must allow psychedelic research, such as allowing health care practitioners to prescribe and use psychedelics as well as use them themselves.
- Doctors can prescribe psychedelics for minors with “specific and appropriate” conditions that are “severe or life-threatening”. This is only possible with the consent from a parent, guardian or the primary care doctor of the minor.
- The Department of Consumer Affairs and the Health and Human Services Agency of the state would have to adopt and implement qualification requirements for psychedelic assisted therapy “created” by an independent professional certification body.
- Voters could approve a municipal ban on psychedelics, or a limit to the number of businesses that can sell them. However, they cannot prohibit the activities of individuals or groups.
- According to the new law, the “simple presence” (or mere existence) of psychedelics could not be used as a basis for determining the risk of harm a child faces. Nor could it be used by state law to reduce parental rights or to justify removing a child from their home.
- Minors who engage in psychedelic activities without parental consent could face penalties. However, “the maximum punishment for such an offense shall not exceed a mandatory education program on drugs, and no conviction will remain on the record of a juvenile.”
- Adults who give entheogens (or other drugs) to a minor that is not a patient are guilty of misdemeanors and can be fined up to $3,000 or $1,500 on the first offense.
- A court would have to recall or dismiss the sentence of a person serving a criminal sentence for conduct that would fall under a lesser crime under the initiative. No hearing would be required. Records of certain convictions can be sealed after a person has completed their sentence.
The campaign has been moving forward for almost a year. However, the pace of the campaign increased after Gov. Gavin Newsom vetoed SB 58 in early October. Lead campaign organizer Dave Hodges is the founder of Church of Ambrosia. The governor stated in a veto that he wanted a new bill to be sent to him by the legislature establishing guidelines for therapeutic access to psychoactive substances.
Last month, Scott Wiener, the sponsor of the vetoed bill, said he would file a revised version of the psychedelics legislation next year with Assemblymember Marie Waldron, a former leader of the GOP’s minority caucus. The bill will be focused on regulated therapeutic accessibility. Wiener stated that the measure would be tailored to Newsom’s message of veto.
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Separate ballot proposals would also legalize the sale of psilocybin to adults, with regulated prices. The state has approved the collection of signatures for this measure, which is backed by Decriminalize California. The reform has been on the ballot twice before, but the efforts have failed due to the difficulties in collecting signatures during the pandemic.
Hodges told Marijuana Moment that he does not oppose other reforms but he believes his Psychedelic Well-Being and Healing Initiative will best secure Californians’ access to marijuana.
The proposal is now final and advocates can start collecting signatures as soon as the state attorney general releases a summary and title of the ballot. Hodges said that to qualify for the ballot in 2024, the campaign would need 546,651 valid California voter signatures by April 23, 2019.
He said that if we missed the April 23 deadline but still gathered enough signatures within the 180 day window allowed by the state, “then the ballot for 2026 will be on our ballot.”
Hodges said that he is confident about the high costs of gathering signatures in California. He
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