Last month, Californian voters not only gave the expected endorsement of the Democrat presidential candidate, but they also voted by an even bigger margin in favour of Proposition 71 — an initiative set to infuse billions of dollars into local stem-cell research. This reflects not only the perceived therapeutic potential of embryonic stem (ES) cells, but also the ethical dimension surrounding this issue.

The proposition germinated among widespread fears that the Bush administration would reverse the 1998 compromise prohibiting federal funding for research involving the creation or destruction of human embryos, but not their use per se. This didn't quite happen, although notably Bush restricted research to the two-dozen pre-existing human ES-cell lines. In 2001, the Weldon and Brownback bills tried to pass a blanket ban on human cloning; this was challenged by senators Hatch, Specter and Feinstein who proposed a selective ban of reproductive cloning. Neither bill passed and it remains unclear whether renewed proposals will be put forth during Bush's final term. Present federal policy is bizarre in that it allows generation of human ES cells and indeed therapeutic cloning — that is, all nuclear transfer techniques used for the purpose of ES-cell production — in the unregulated private sector, while banning federal support for any work with cells derived from such research. As a result, several privately funded laboratories have arisen near academic centres. California passed progressive legislation two years ago allowing therapeutic cloning, but the drive for $1 billion in funding failed.

The ES cell divide is echoed across the globe. Asia is taking a more pragmatic view, spurred on by the first successful somatic-cell nuclear transfer in South Korea earlier this year; a Japanese ethics council has also endorsed such experiments in principle. Germany remains particularly sensitized to all ethical questions and, unsurprisingly, its ethical council was resistant to therapeutic cloning; indeed, work on post-2002 ES cells remains illegal. The UK, however, is actively pursuing therapeutic cloning. These divisions are mirrored at the UN level; a constructive motion to unite the world in banning human reproductive cloning — submitted by Germany and France — fell victim to a US-backed blanket ban of all forms of human somatic-cell nuclear transfer. This autumn, the UN again faces a vote on two competing resolutions: to ban all, or only reproductive, cloning.

Meanwhile, several influential Californians congregated to push for a highly ambitious plan in consultation with leading local stem-cell researchers, such as Irving Weissman: they organized a public vote, proposing to release $3 billion in state bonds over a decade. Well-organized publicity by patient advocacy groups highlighted the therapeutic promise of ES cells for the treatment of conditions such as Parkinson's disease, traumatic spinal cord injury and type I diabetes; and the prospect of an even less compromising federal agenda under a second Bush term galvanized Californian support for Proposition 71. Importantly, the proposition is explicitly designed to insulate ES-cell research from political interference. Effectively, the stated goal is to create a 'mini National Institutes of Health' outside of federal and state control that circumvents the ban on new ES cell lines. $3 billion certainly dwarfs the $25 million the NIH spends on ES-cell research annually just as much as it dwarfs the stem-cell budgets of most other countries. As such, this is a welcome long-term boost for research on a new frontier in cell biology.

Before we toast this victory for stem-cell research, lets consider some of the problems associated with Proposition 71. First, the sum is huge, especially considering it will double before the repayments are due in five years and California remains in grave fiscal difficulties. To address this, organizers have banked on recouping some of the money through the marketing of licences and possibly therapies. This opens up a sizeable can of worms; the much touted promise that therapeutic cloning will allow the generation of immunocompatible replacement tissues is far off, as at present somatic-cell nuclear transfer is inefficient. ES cells not involving nuclear transfer harbour more promise, although coaxing them into the desired differentiation pathways in vitro remains difficult, and they can stay prone to causing cancer. In the first instance, the promise lies more in generating renewable human cell lines and possibly tissues with disease-associated defects to allow insight into disease mechanisms and drug discovery. This is far away from $6 billion revenue and it may also disappoint a public expecting medical miracles. The hefty price tag will add pressure to focus on revenue-generating leads in favour of basic science questions. Also, will research be published or kept behind closed doors to secure maximum revenue potential?

Second, the real crux will be rigour and accountability in awarding grants. It is clear that the board of the Institute for Regenerative Medicine that awards the grants is very much its own boss and that it will include both scientists and patient interest groups. Will scientific excellence drive the selection process or will the diabetes-orientated therapy goals of the founding members of Proposition 71 dominate the research agenda? Will grant reviewing be on an international and independent basis? There are ample examples of privately funded granting agencies that excel at the grant-funding process, but transparency will be important.

Third, people outside California have voiced concerns about the possible impact on the stem-cell research demography in the coming decade: given the less favourable climate elsewhere, will researchers resist the gold-rush lure of the Californian stem cells? This seems to be a less important concern: if the stem-cell elite is drawn to a new Mecca, so be it. The initiative will benefit science overall and may even encourage more pragmatic legislation elsewhere. However, the Bush administration may be tempted to further antagonize stem-cell research at the federal level.

Undeniably, research with human embryos is rightly scrutinized in detail. Unfortunately, ethics are easily guided by religious morality over plain humanism. Particularly lamentable is if the former informs law to block promising medical research, but not what most would abhor: reproductive cloning. Everyone agrees this must be banned, but the somewhat extreme position of the current US administration continues to prevent a formal international ban.

If invested wisely, the Californian initiative will do much to catalyse this important research area. In the meantime, international consensus should emerge to forestall unacceptable applications of cloning technologies.