The Associated Press called the measure defeated at 9:45 p.m. Tuesday.
What would have happened if the "green stuff" turned into "green" for California taxpayers?
Los Angeles City Councilwoman Janice Hahn says L.A. deserves a cut of the cash.
"I think we should have a business license tax, about 10 percent on their gross receipts. It's a way to bring in money to the city of Los Angeles and we need the money right now," said Hahn.
Wednesday is the deadline for L.A. City Councilmembers to propose new taxes for the March 2011 ballot. If Proposition 19 passed Tuesday night, Hahn said she would push a pot tax first thing Wednesday.
"I don't know how much money it would bring in, but I think it's worth having the voters decide if they think it should be taxed," said Hahn.
But in Long Beach, a tax on cannabis was already on the ballot Tuesday. It would be a $150 tax for every $1,000 of marijuana sold. The only exception to the tax is licensed medical marijuana collectives.
"I think it's smart, I think it's progressive," said Long Beach voter Chris Schilton. "I think they should tax it. I know Long Beach needs money right now for their infrastructure. I think it could help for that."
La Puente, Sacramento, San Jose, Oakland and Berkeley were also preparing for cannabis taxes Tuesday.
If Prop. 19 would have passed, one big obstacle would have remained.
"We've already been informed by the federal government that they're not going to accept it," said L.A. City Councilman Dennis Zine.
Zine says U.S. Attorney General Eric Holder would sue the state if recreational marijuana is legalized, so a tax is a waste of time and money.
"I don't know how you're going to tax something when it's not manufactured, it's not distributed, like alcohol, through a process," said Zine.
The tax itself went "up in smoke" instantly Tuesday night as voters put out Prop. 19 at the polls.