The California Legislative Analyst’s Office (LAO) released its review this week of a prospective ballot initiative to legalize psychedelics, outlining not only the plan’s policy implications but also its potential fiscal impacts on the state—which the report calls “various” and “uncertain.”

The measure, which proponents submitted the final language for earlier this month, would allow adults to legally grow, possess and use substances like psilocybin, LSD, MDMA, DMT, ibogaine and mescaline. A person would need a healthcare practitioner’s recommendations to purchase psychedelics at regulated stores.

As filed, the so-called Psychedelic Wellness and Healing Initiative of 2024 refers to “entheogenic” plants and substances, and it includes cannabis among them.

That approach, LAO said in its review, could cost hundreds of millions of dollars in potential tax revenue to the degree it affects the state’s existing marijuana market.

“If the interpretation and implementation of the measure causes a large share of cannabis businesses and consumers to shift from the existing legal cannabis market to the new market created by the measure,” the report says, “it could result in a net reduction of hundreds of millions of dollars in cannabis-related tax revenue.”

On the other hand, LAO added, the change could in fact

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