The move would bring in more than a billion dollars per year in state revenue.
State Assembly Bill 390 would treat the now-illegal substance in a manner similar to alcohol. Once you turn 21, you could legally possess, cultivate or sell marijuana.
State Assemblyman Tom Ammiano (D-San Francisco), who authored the bill, says it's time California reaped some of the revenue from a crop that by some estimates is a $14 billion industry in the Golden State. The State Board of Equalization estimates marijuana retail sales would rake in $1.4 billion if AB390 passes.
Law-enforcement and faith-based groups had grave concerns over the effects on youth and society.
"Don't we have enough trouble with the two legal drugs and mind-altering substances, as well as the health benefits and the public-safety impacts of alcohol and tobacco?" said San Mateo Police Chief Susan Manheimer, a member of the Calif. Police Chiefs' Assoc.
The win is likely to be short-lived. The proposal needs one more committee approval by Friday's deadline, which won't happen without a rare special waiver.
Still, the author says a law-making body taking action shows promise.
"It legitimizes the quest for debate, the quest for discussion. There was a time when the 'M' word would never have been brought up in Sacramento," said Ammiano.
Though Governor Arnold Schwarzenegger likes the current law that makes marijuana illegal except for medicinal purposes, he said debating change is good for democracy.
"All of those things ought to be discussed, because one ought to hear the pros and the cons of everything, and I'm all for that," said the governor.
Ammiano is weighing two choices: Take an existing bill, gut it, and insert the marijuana proposal; or wait until voters in November decide the fate of a citizen initiative, which somewhat legalizes pot.
Some lawmakers fear the ballot initiative will have too many mistakes that won't be easy to change.
"It's far better for the Legislature to get ahead of it and respond to voter concerns, but be able to do so in a way that if there's flaws, we can adjust it," said Assemblywoman Nancy Skinner (D-Berkeley).
Other states are also talking about changing their marijuana laws as well. New Jersey approved it for medicinal use on Monday. Washington state is about to decide whether to remove criminal penalties for marijuana use.
Some legislators say that taxing what many people smoke would be a major moneymaker for California.
"I think it's a good idea to regulate it, you know, generate income for the state and possibly put an ease on the budget crisis that they have now. People are going to smoke it anyway," said Los Angeles resident Steve Ferra.
Some local residents saw the bill as opening Pandora's box.
"I think that's not good for society because they cannot control the alcohol, and now they're giving another weapon for the juveniles to go the wrong way," said Los Angeles resident Arturo Acevedo.
Tuesday's hearing marks the first time lawmakers have ever considered repealing the marijuana prohibition that went into effect in 1913.