I think legalization will push the cartel supply into the mainstream for 2 basic reasons: 1) People who wanted to grow pot for consumption or sale or to save money are probably already doing so and 2) Prop 19 will only allow personal grow areas up to 25 sq ft (5 ft x 5ft for example) and considering the need for both male and female plants to cross pollinate each new growth area will be barely enough to supply the house that grows it and maybe a few friends.
You seem to base your projection on the idea that a lot of new home grown supply will come online. Now that you know the law limits the amount of growth - and the amount to possess and to sell to no more than 1 ounce - do you think differently? Or do you think a lot of new growers will come aboard, even if small time? Frankly I don’t think the home growers will dent the demand. People can make beer and wine at home, it doesn’t really dent the demand much. Given the restrictions and need for licensing I do not see new home growers suddenly trying to supply retail establishments. Yes, home growers will supply friends but I suppose this all depends on how many new home growers come on line. I just do not envision a lot of new growth.
Prop 19 also seems to allow municipalities the right to decide who can and cannot sell it at retail. This might result in a reduction in the current number of clinics and/or retail establishments and push the retailers underground. At the same time and somewhat ironically, Prop 19 allows any wholesaler with a license the right to transport their crop to any other city or county without regard to the local ordinances governing the sale! Your friends in Humboldt could get a local permit and wholesale by the ton to re-distributors in San Diego without any repercussion.
So what I see happening is perhaps a few more people supplying themselves and close friends, and then a lot more of the current suppliers going mainstream. It seems to me most of the people retailing MJ are buying from middlemen who in turn are buying from large cartels - I cannot otherwise explain the massive amounts of similar strains showing up in various co-op/clinics. But with permits to transport and sell large quantities of MJ, the middlemen will seek out the paths of least resistence and unless there is a major crackdown on large producers (which I doubt will occur) it is in their best interest to buy by the kilo (or tonnage) for redistribution to retailers and sub-wholesalers.
I otherwise agree with you, the dream of big tax revenue is a joke. I just don’t see many people outside the current network of suppliers/retailers even trying to get permits to grow or sell it. Their current business model is to sell it underground or in tax-free co-ops. It does appear that Prop 19 contradicts the Medical MJ law which allowed the co-ops to form and sell pot tax free, and I also wonder what the implications are for both licensing of co-ops, reducing the number of co-ops, as well as the ramifications of slapping a tax on “medicine” that had previously been sold tax-free. If the tax is too high, we both know pot sales will go back to the underground. The tax idea is just plain pipe-dreaming pun intended.