[420 Girl]

Vendors of "medical marijuana" at legal herbal clinics in Oakland, California are offering to pay increased taxes in a move that many believe could save the state from bankruptcy.

Medical marijuana is big business in California. In Oakland last year "pot clubs" rang up sales of more than $20m (£12m). Currently those clubs pay a minimal tax of $1.20 for every $1,000 of marijuana sold.

However, in a move rare among business owners, the medical marijuana clinics are offering to raise the tax they pay to $18 for every $1,000 of weed sold. The marijuana tax, which voters will be asked to endorse in a ballot this month, would bring in about $400,000 of annual revenue in Oakland alone. If adopted statewide, the taxes could be worth billions.

California's governor, Arnold Schwarzenegger, declared a statewide fiscal emergency in California last Wednesday after legislators failed to agree on a budget to address its $24bn deficit. Tax revenues are plunging as the state suffers particularly badly in the global recession, and government offices are closing three days every month to cut costs.

The results of the postal ballot on the marijuana tax in Oakland will be announced on 21 July.

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