California's Proposition 19 Rejected by Voters

VIDEO:The Marijuana Millionaire
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California voters snuffed out Proposition 19, which would have legalized recreational marijuana, according to ABC News projections, but backers said they would mount another legalization campaign in 2012.

Despite a potential double-digit loss in the polls, Richard Lee, the Oakland medical marijuana entrepreneur who almost singlehandedly bankrolled the measure, called the effort a "tremendous moral victory" setting the stage for another legalization bid.

"The fact that millions of Californians voted to legalize marijuana is a tremendous victory," he said in a statement. "We have broken the glass ceiling. Prop. 19 has changed the terms of the debate."

Supporters of the defeated measure said the referendum brought unprecedented attention to their cause.

VIDEO:The Marijuana Millionaire
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"Prop. 19 has elevated and legitimized the discourse around marijuana policy like nothing ever before," said Ethan Nadelmann, executive director of the Drug Policy Alliance, one of the nation's leading advocates for reforming drug laws.

"This is the first time major elected officials and labor unions and civil rights organizations have endorsed a marijuana legalization measure. The debate is less about whether to legalize marijuana and increasingly about how to legalize marijuana," Nadelmann said.

Of the more than $3.4 million put up to support California's Proposition 19 ballot initiative to legalize recreational marijuana, half the money came from Lee, an Oakland entrepreneur behind a medical marijuana dispensary, nursery and other pot-related businesses.

"It was a very bold move on his part and it was a bold move that -- win or lose -- will turn out to be the right move," Nadelmann said.

Billionaire financier George Soros added $1 million to proponents' warchest in the last days of the campaign.

For supporters, legalization would end what they term a hypocritical ban on a drug they claim is less harmful than alcohol. They claim it would cut law enforcement costs, raise tax revenue, and make it harder for children to get marijuana. Supporters include the California branch of the NAACP, state chapters of the American Civil Liberties Union, the California Young Democrats, the Republican Liberty Caucus, the California Council of Churches, and several big labor unions.

For opponents, Prop. 19 represents a threat to public safety, violates federal law and drug-free workplace rules, and wouldn't generate much tax revenue at all. Critics include Mothers Against Drunk Driving, most law enforcement groups, all the state's major party candidates for governor and U.S. Senate, and the California League of Cities.

The White House drug policy director Gil Kerlikowske applauded the vote.

"The Obama Administration has been clear in its opposition to marijuana legalization because research shows that marijuana use is associated with voluntary treatment admissions for addiction, fatal drugged driving accidents, mental illness, and emergency room admissions," Kerlikowske said in a statement.

While voters of Arizona, Oregon and South Dakota considered medical marijuana measures on Tuesday, California's vote on legalizing pot outright had drawn the most attention.

Are Prop. 19 Supporters Blowing Smoke?

Lee was seen as the force behind the ballot initiative to let people 21 and older grow and possess marijuana and allow local governments to permit retail sales and collect taxes.

Lee, who used to fly ultralight planes and loved motorcycles, made the legalization of marijuana his life cause after a 1990 fall left him paralyzed from the waist down during tour as a lighting technician for Aerosmith. Medicinal pot, illegal at the time, served to dampen the back spasms as he sat in his wheelchair, he told the San Francisco Chronicle.

Supporters said Lee decided to push the measure even though veteran activists urged him to wait until 2012. But Lee has said the recession made his tax-and-regulate message all the more relevant.

"I've always thought since I grew up in the 70s that cannabis prohibition is unjust and hypocritical," Lee, 47, told ABC News earlier this year.

Oakland's Oaksterdam University, which Lee founded three years ago, is the centerpiece of a small marijuana business empire that brings in as much as $7 million a year. The university, which has grown to three campuses in California and one in Michigan, has given his cause a platform.

The school, which boasts that it provides "quality training for the cannabis industry" and teaches more than 4,000 people a year, along with Lee's other businesses, have helped revitalize part of downtown Oakland and turned the city into something of an unofficial capital of the legalization movement.

"The bad economy has definitely helped us out a lot as far as opening up a lot of people's minds to seeing that this is a waste of money and that we need to use our public funds better and tax these people," Lee told ABC News.

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