The bill by San Francisco representative Tom Ammiano, would legalise the cultivation, possession and sale of marijuana by people 21 and older. It would charge growers and wholesalers a $5,000 (£3,400) initial franchise fee and a $2,500 annual renewal fee, and would levy a $50 per ounce fee on retailers.
The law, which would make California the first state to legalise marijuana, would inject an estimated $13bn a year in revenue into California's empty coffers. Governor Arnold Schwarzenegger on Friday signed a $130bn budget that raises sales and income taxes, and dramatically slashes spending. States across the country are facing massive revenue shortfalls, as income and real estate tax receipts fall and outlays for unemployment insurance and health coverage rise.