The Legalization of Medical Marijuana and its Effect on Florida’s Economy

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Image of a marijuana plant with health issues written on each leaf: "Aids, Hepatitis C, Chemotherapy, Pain, Spinal Injury, Glaucoma, Cancer," next to a blank prescription paper with a prescription bottle full of marijuana pouring over it
Publication Date: 
Thursday, March 2, 2017

In the November election of 2016, Floridians decided with a majority vote of 71.3% to approve constitutional Amendment 2: the Florida Medical Marijuana Legalization Initiative [1]. After having failed by less than 3 points to reach the super majority needed to pass back in 2014, a human advocacy group drafted a new ballot and once again left it up to the people to decide [2].

Many experts have theorized the cause behind such drastic difference in approval rates between the 2014 and 2016 elections. Voter turnout in 2014 was low at 50.5%, which during midterm elections is usually composed of a more conservative demographic [2,3]. In comparison, voter turnout for the 2016 elections was much higher at 74.5%, and like previous general elections more likely to have been composed of a more progressive demographic [1,3].

Opponents of the 2014 initiative criticized the ambiguous wording on the ballot, arguing that such vague language would open loopholes that would allow unrestricted sale and use of cannabis by anyone, including minors [4]. In an attempt to appease opponents of the 2014 amendment, the new ballot language specified with more detail the conditions eligible to be treated with cannabis and added a new section requiring minors to provide parental approval to qualify for the treatment [5].  

 



 

What exactly does this mean for Florida? The requirement for legal use in Florida is that people with “debilitating medical conditions as determined by a licensed Florida physician” are allowed to use marijuana to treat their conditions [5]. A number of these conditions are enumerated in the amendment, they range from cancer, human immunodeficiency virus (HIV), and post-traumatic stress disorder (PTSD) to epilepsy; however, other conditions may also qualify given physician approval.

According to the ballot, the Department of Health (DOH) must start issuing identification cards and registering Medical Marijuana Treatment Centers (MMTCs) no later than nine months after the effective date of January 3, 2017. Otherwise, Floridians may “seek judicial relief” -i.e., sue- the DOH for failing to meet its constitutional duties [5]. In addition, the DOH “must receive written consent from the minor’s parent or legal guardian” before issuing identification cards to minors, which was seen as an issue to critics of the 2014 amendment [5].

Furthermore, the amendment declares that nothing in the section “shall affect or repeal laws relating to the nonmedical use of marijuana” or “require accommodation of … smoking … in any public space” [5].  However, it does not place limitations on how many or where dispensaries and MMTCs are allowed, meaning such regulations would be left to the local governments to decide and implement. Finally, the ballot wording claims sales tax “will likely apply to most purchases” leading to a “substantial increase” in government revenue.

Perceived as somewhat controversial, medical marijuana will technically not be prescribed by a physician nor is it listed as a “common household remedy” by the Department of Business and Professional Regulations. Thus it fails to meet the requirements under section 212.08(2)(a), Florida Statutes to be exempt from sales tax [6].

Passage of this initiative offers a new industry and an opportunity for economic growth in Florida. Exactly how much impact will partly depend on the amount of regulation and burdens placed by the state and local governments. To understand the extent to which legal medical marijuana could affect Florida’s economy, it is necessary to take a more in depth look at its market.

A study conducted by the Florida Office of Economic & Demographic Research estimated the number of potential medical marijuana users in Florida in 2017 to be anywhere from 1,586 to 1,752,277. The analysis noted, “The lower end of the range is more likely” if the initiative “faces implementation, administrative, and/or legal challenges.” [7].  

The city of Boca Raton, for instance, has placed a year-long moratorium banning the cultivation, processing, and selling of medical marijuana; other cities have put in place similar measures to allow time to analyze the effect on the community, zoning, and other guidelines.

Table 1 presents user estimates based on six different approach methods for 2015 under the 2014 proposed constitutional amendment and updated estimates for 2017 under the 2016 constitutional amendment.

 

Table 1: Estimates of Potential Florida Medical Marijuana Users [7]

Estimation Approach

April 1, 2015

(if 2014 version had passed)

April 1, 2017

(following 2016 approval)

I. States with medical marijuana laws

452 to 417,252

1,586 to 440,552

II. Disease prevalence

1,295,922

2,038,131

III. Disease incidence

116,456

130,237

IV. Use by cancer patients

173,671

247,689

V. Deaths

46,903

47,805

VI. Self-reported marijuana use

1,052,692 to 1,619,217

1,168,775 to 1,752,277

Range

452 to 1,619,217

1,586 to 1,752,277

 

Florida is predicted to make up about 7.9% of the total US legal marijuana market and 16% of the total US medical marijuana market, while the state’s annual medical marijuana sales are projected to surpass an estimated $1.6 billion by 2020 [8]. Such figures may attract a lot of interest, but for many the path to starting a viable business could be financially risky. One of the biggest challenges is that banks may be unwilling to give out loans and handle the accounts related to marijuana businesses due to marijuana’s illegal federal status. For this reason, people without large capital find it hard to break into an industry in which acquiring licenses and inventory could sometimes run into the millions.

Assuming that such challenges are resolved, the legalization of medical marijuana could help grow other industries including legal, transportation, and agriculture. The latter leads to an important question: Could marijuana be the answer to Florida growers who are looking to expand their crops?

Because marijuana is classified as a Schedule I controlled substance under the federal Controlled Substances Act of 1970 and the federal government regulates interstate commerce, it is illegal for Florida growers to export marijuana to other states.  Still, if studies determine marijuana as a profitable and viable crop in Florida, then perhaps in the future growers could see themselves benefiting from its legalization.

The medical marijuana industry is poised to face many challenges in the upcoming months, but Florida should expect to see a rapidly emerging industry help diversify and eventually grow its economy. More research is needed to determine the extent at which the legalization of medical marijuana will affect Florida’s economy and which sectors will benefit the most.

 

References:

[1] Division of Elections, Florida Department of State (2016). November 8, 2016 General Election

[2] Division of Elections, Florida Department of State (2014). November 4, 2014 General Election

[3] Wasserman, D. (2013, May 31). The GOP's Built-In Midterm Turnout Advantage

[4] Drug Free Florida Committee. Vote No On 2

[5] Divisions of Elections, Florida Department of State. Proposed Constitutional Amendments to be voted on November 8, 2016

[6] The Florida Legislature. The 2016 Florida Statutes

[7] Office of Economic and Demographic Research, Florida Legislature (2015, October 12). Estimates of Medical Marijuana Users in Florida

[8] New Frontier (2016, November 8). Medical Marijuana Initiative Passes in Florida

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