NEW YORK (CBSNewYork/AP) — New York City Comptroller John Liu is proposing a historic overhaul of the city’s marijuana laws, believing that legalizing medical marijuana and allowing adults to possess an ounce of pot for recreational use would pump more than $400 million into the city’s coffers.

The sweeping change, which would put New York at the forefront of a growing national debate over use of the drug, calls for recreational marijuana to be regulated and taxed like alcohol and tobacco.

“By regulating marijuana like alcohol, we would keep thousands of New Yorkers out of the criminal justice system. We would take sales out of the hand of criminals, sapping the dangerous underground market that targets our children,” Liu told reporters including WCBS 880’s Rich Lamb on Wednesday.

Liu, the city’s top financial officer who is also running for mayor, commissioned a report that finds that New York City has a $1.65 billion marijuana market. If a 20 percent excise tax and the standard 8.875 percent city sales tax is imposed on the pot sales, it would yield $400 million annually in revenue, Liu believes. Another $31 million could be saved a year in law enforcement and court costs.

“It is economically and socially just to tax it,” Liu told the Associated Press in an interview Tuesday. “We can eliminate some of the criminal nature that surrounds the drug and obtain revenue from it.”

The comptroller’s plan, which likely faces stiff opposition from state lawmakers who would have to authorize it, calls for the state to oversee private businesses selling pot. Licenses would be required, fees would be charged, and using the drug in public or while driving would be prohibited.

Liu’s team calculated that 900,000 city pot smokers spend about $2,000 a year on the drug. He is calling for the revenue surge to be used to reduce tuition at the City University of New York for city residents.

Twenty states and the District of Columbia currently permit medicinal marijuana. Two states, Washington and Colorado, last year voted to allow recreational marijuana for adults.

One of the nation’s leading pro-marijuana industry groups applauded Liu’s proposal.

“We recognize that marijuana is better sold behind the counter than on the streets,” said Betty Aldworth, deputy director of the National Cannabis Industry Association.

But neither Liu nor any city official has the authority to decriminalize marijuana; that can only be done by a law that passes the state legislature and is then signed by Gov. Andrew Cuomo.

The New York State Assembly passed a bill in May that would make possession of small amounts of marijuana punishable only by a fine, rather than an arrest.

However, the comptroller acknowledged that the chances of marijuana legalization passing the state legislature are “close to nothing.”

Mayor Michael Bloomberg, whose support could sway minds in Albany, has also long opposed efforts to legalize marijuana.

In June, he called the push to legalize marijuana “wrong-headed” and said if drug dealers can’t sell marijuana, they’ll sell something else.

“Drug dealers have families to feed,” Bloomberg said. “And the something else is going to be worse.”

His top spokesman declined comment on Liu’s proposal.

Liu is currently placing fifth in Democratic mayoral polls. Public Advocate Bill de Blasio is currently leading the polls followed by City Council Speaker Christine Quinn, Ex-comptroller Bill Thompson and former Rep. Anthony Weiner.

LINK: Full Poll Results (pdf)

Sal Alabanese, a longshot Democratic mayoral candidate, has also called for legalizing marijuana.

On the Republican side, the poll found that Joe Lhota has maintained his lead over billionaire businessman John Catsimatidis.

Lhota has the backing of 43 percent of those polled, compared with 37 percent for Catsimatidis and 9 percent for George McDonald.

The primary will be held on Sept. 10. If no candidate reaches 40 percent in the primary, the top two will advance to a runoff.

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