The proposed law calls for standard sales taxes plus an excise tax of $50 per ounce. I don't think this law will pass, but eventually I think the feds are going to open things up and allow states to legalize marijuana, and I fully expect to see excise taxes plus sales taxes like we see with tobacco and alcohol. They're going to prop the prices up that way, and as long as they don't go too crazy it won't encourage a black market because most people are going to want to go to the “pot store” and choose from a wide variety of quality product at reasonable prices, product that has been produced in a regulated environment. They are not going to want buy product with who knows what on it from criminals if they have that choice. Black market product will have to be considerably cheaper than store bought for there to be any black market for marijuana of any consequence. Like you said, prices will drop dramatically, so there will be a lot of room for taxes before the cost to consumers gets anywhere close to what they are paying now for black market product. Black market producers would have to be willing to accept a whole lot more than they get now for their product from the few people willing to buy it. It's not going to be worth the effort and the risk involved. Even with high taxes, I doubt we have much more of a black market for marijuana than we have for alcohol.
$50 an ounce will cause most users to just grow it in their back yard. It is real hare for most beer drinkers to brew one year’s supply of beer at home. It is not real hard for most pot users to grow one year’s supply of pot at home, assuming they have a house and a yard.
Law of unintended consequences will insure that the revenue generated by legalizing pot won’t go very far to closing California’s massive structural deficit.