AUMA a Trojan Horse? Marijuana Activist Attorney says AUMA is a Trojan horse

How “Marijuana Legalization” a la AUMA Is Bad News for Cities and Counties Counting on Marijuana-Related Revenue
    “AUMA” is “The Adult Use of Marijuana Act,” aka “marijuana legalization,” aka Initiative No. 16-0103.  Once it gets on the November 2016 ballot, it will have an as-yet-unknown-as-of-June-1,-2016 proposition number, but if I could give it a number to suit it, it would be 666, because it is so fiendishly written.
When the average person votes for “legalization,” they assume that “legalization” will create fewer crimes, and require less expenditure for police and prisons.  They also assume that their state and local governments will receive the touted benefits of legalization – increased tax revenue.  And local elected officials also assume that the local sales taxes AUMA lets them add to marijuana under AUMA will come back to local governments as revenue. 
Those are the assumptions that the drafters of AUMA hoped to foster by hiding AUMA’s real legal consequences in 62 pages of dense legalese and multiple citations to other laws that took me 36 hours to decipher, analyze, and explain in writing at
This article is about just one of the many, sneaky and unexpected-to-all-except-its-drafters consequences of AUMA.  If cities and counties add their own sales taxes to marijuana, none of that money will actually go back to local governments.  If, as an elected officials or city manager or city attorney you find this hard to believe, remember, you can do anything when you do it via a voted-approved, statewide initiative like AUMA.  And think about this: since AUMA is 62 pages long, it has a lot of room to do a lot more than just “legalize marijuana.”
    Before I explain how this works, I should give you my credentials to do this kind of detailed legal analysis.
     I’ve been an attorney since 1982, went to one of California’s top law schools, Hastings College of the Law (ranked No. 11 nationwide when I was admitted), wrote onto the Hastings Law Journal, was named Outstanding Substantive Editor by my supervisors on the law journal, worked at the “pre-eminent law firm for the Inland Empire, Best Best & Krieger” (what it called itself), worked for three different California Court of Appeal Justices and a federal district court judge, and wrote the CEB Guide to Handling Civil Writs and Appeals for California’s Continuing Education of the Bar.
     Ending as a senior judicial chambers attorney with the California Courts of Appeal, I worked for Justices H. Walter Croskey, F. Douglas McDaniel, and Robert J. Timlin, and I also worked for Timlin when he was appointed to the federal District Court, the new Eastern Division of the Central District of California that they opened in Riverside.  
     A common matter I handled over and over again in every place I worked was deciphering convoluted legalese, whether in a contract, a statute, or a new code section, ordinance, or initiative.  So I became an expert at statutory interpretation, and Sutherland on Statutes and Statutory Construction was my bible. 
    As a judicial chambers attorney, I also handled the more complex appeals, so many of the opinions I ghost-wrote for the justices for whom I worked were not only published, but even cited in law review articles
    In other words, I can assure whoever gets this analysis that AUMA has been very cleverly written to disguise its true intent, which is to take all the revenue from marijuana, including taxes that would normally belong to cities and counties, and protect it all in a “special trust fund” that can be accessed only by the appointed officials who the Governor (whoever it may be, but Newsom is definitely running) puts in charge of the “Bureau of Marijuana Control.” 
    More bad news: if you don’t like the Bureau’s decisions, you can appeal those decisions to a panel of people also appointed by the Governor.  (So you can see why Lt. Gov. Gavin Newsom, the “governor in waiting,” is a BIG AUMA fan . . . . that kind of power and control should help his bid for the White House in a decade or so.)
    When I prepared my original, annotated legal analysis of AUMA, I didn’t even notice this particular consequence until someone asked me a specific question about it.  So I concentrated on that issue and was both shocked and amused at how the people behind AUMA managed to slip the stiletto into cities and counties so smoothly that even I didn’t notice it on my first analysis, which took 36 hours!
    The tax issue was presented to me in the form of a question about a claim made by a paid AUMA PR person, Chris Conrad (who is not an attorney, by the way).  So my answer is written in the form of a tongue-in-cheek question to Chris Conrad about his claims.
    But when I read AUMA, and analyzed it, what I saw, what really struck me, was that AUMA was specifically written so that none of the tax money goes where it would normally go.  Here’s the section in AUMA that states what happens to all the tax money, taken directly from AUMA’s text (with underlining by me to make my point): 
    Section 34018.
    (a) The California Marijuana Tax Fund is hereby created in the State Treasury. The Tax Fund shall consist of all taxes, interest, penalties, and other amounts collected and paid to the board pursuant to this part, less payment of refunds. 
    (b) Notwithstanding any other law, the California Marijuana Tax Fund is a special trust fund established solely to carry out the purposes of the Control, Regulate and Tax Adult Use of Marijuana Act and all revenues deposited into the Tax Fund, together with interest or dividends earned by the Use of Marijuana Act without regard to fiscal year and shall be expended only in accordance with the provisions of this part and its purposes. (c) Notwithstanding any other law, the taxes imposed by this part and the revenue derived therefrom, including investment interest, shall not be considered to be part of the General Fund, as that term is used in Chapter 1 (commencing with section 163 00) of Part 2 of Division 4 of the Government 42 Code, shall not be considered General Fund revenue for purposes of Section 8 of Article XVI of the California Constitution and its implementing statutes, and shall not be considered “moneys” for purposes of subdivisions (a) and (b) of Section 8 of Article XVI of the California Constitution and its implementing statutes.”  I like to call Section 34018 the “The Bureau of Marijuana Control gets to keep ALL the money” provision.
    As I said in my initial analysis, “What this means is that none of the revenue from marijuana is going to go to the public schools or to community colleges. It will all go to the new bureaucracy which AUMA creates, including salaries, pensions, staff, etc., and to law enforcement.”  I should also have added that none of it is going to the cities and counties, either.
    FYI, if taxes interest you, be sure to read pages 38 through 45 of my initial analysis, which you can find at
    Section 34018, the “The Bureau of Marijuana Control gets to keep ALL the money” provision, is going to make for an interesting legal fight between the Bureau of Marijuana Control and California’s cities and counties.  Interesting, yes, but very, very one-sided; put your bets on the Bureau! Because AUMA was intentionally written, by some very clever attorneys, to create a slush fund under the Governor’s control. 
So just follow along and I’ll explain why cities and counties will lose any legal challenge to the loss of their marijuana-related tax revenue if AUMA passes.
    AUMA says that local governments — cities and counties — can add their own use and excise taxes on top of the 15 percent excise tax the State will put on marijuana (which will also be on top of the sales and use taxes the State will also add to its excise tax).  (See Section 34011(d).) 
    Normally, if a city or county adds its own use and sales tax to marijuana sold in within its borders, it is going to expect to get that tax — or at least some part of it — back. There is a whole complicated method, provided for by law, about how tax money from sales and use taxes are allocated to different funds.  That is normally how a city or county would expect to get its share of tax money from marijuana.  (See, e.g.,
    But “normal” has nothing to do with AUMA except, of course, that NORML [the National Organization for Reform of Marijuana Laws, aka to its critics as the National Organization for Referral to Marijuana Lawyers] is actually endorsing AUMA, since AUMA will also result in more work for “marijuana attorneys.”
    What “normally” happens is based on existing laws.  But can those be changed by a voter-approved, statewide initiative?  You bet.  And here’s the new code section that, if AUMA is adopted, will change what’s normal.  Remember Section 34018, the section that creates that special trust fund that gets to hang onto all the revenue from marijuana?  That section, section 32018, uses the magic phrase, “Not withstanding any other law” not once, but twice!  Twice in one code section! Why?
    It’s there twice because the people planning to steal all the revenue from legalizing marijuana, the ones who paid to have this “marijuana legalization” initiative drafted to be long and confusing, wanted to be sure that when the new Bureau of Marijuana Control refuses to give any tax money back to local governments (or public schools, community colleges and state universities), and when the Bureau gets sued by cities and counties, the Bureau can point to that magic language and say, “See, your Honor, the voters intended for our bureaucracy to keep all this money!”  And any half-way adequate appellate court is going to say, “Yes, that’s what AUMA does.”
    I’ve already expressed my suspicions about why Gavin Newsom is out there urging people to vote for AUMA: it creates a slush fund under the Governor’s control, and the valuable power to appoint people to cushy jobs.  And then those people owe you favors.  And then they, too, are also owed favors by the people whose nonprofits get the contracts from the bureau to run all those drug counseling, drug education, and community service programs across the whole state of California. AUAM is just one big patronage scheme in the making
    And that will come in handy for Newsom’s next rumored stop after the Governorship of California.  Yes, indeed, guess who’s thinking about running for President?  To paraphrase Al Franken playing Stuart Smalley, I can just hear Newsom telling himself, as he admires himself in the mirror every day, “I’m young enough, I’m good-looking enough, and gosh darn it, older Democratic ladies love me!  Plus, all those cronies who got money by starting up nonprofits that then got contracts to carry out the Bureau of Marijuana Control’s mission to tax, control and regulate everyone trying to use a little marijuana, will surely gratefully share some of their assets with me so I can be generous to them from the White House, too!”  (Newsom then probably had to take a deep breath after making such a long, imaginary soliloquy.  I know I did!)
    Did anyone else hear this imaginary conversation, too?
In conclusion, please share this e-mail with your local, cash-strapped city and county officials.  (They might want to urge their residents to hold out for a more equitable form of “legalization” as the economy begins to tank again . . . .)  And tell them to enjoy something from you for free, since this article represents at least 40 hours of what would normally be highly-paid attorney time, all for free, as a public service from someone who hates to see people deceived by my not-so-fellow attorneys.
Letitia E. Pepper, Esq., SBL 105277, Riverside and Oceanside, California

Here is a link to explain why no city or county will get any sales taxes from marijuana sales if AUMA passes:

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