State economists have scheduled a meeting Thursday morning to explore further whether approval of a medicinal marijuana initiative will be a money-maker or increase the cost of government.
The Financial Impact Estimating Conference invited seven state agencies, groups representing city, county and law enforcement agencies, and associations such as the pharmacy board to a meeting Monday to get to the bottom line. Representatives said either they expected no effect to their budgets if the amendment passed or they could not calculate one.
The FIEC is responsible for determining only if a proposed constitutional amendment would change either the revenue stream or the budgetary needs of state and local governments.
And although the FEIC determined that medicinal marijuana could be subject to a sales tax it also noted that agencies' rule-making authority and how the Legislature may implement the initiative could trigger tax exemptions – making the sale of medicinal marijuana tax-free. That’s why Amy Baker, the FIEC chair, wants another round of talks with representatives from the departments of Revenue and Business and Professional Regulation.
“There are two areas that we are looking at: One, is it an over-the-counter drug or a common household remedy that would be exempt?” Baker said. “And if it is an agricultural product and it is sold by the person who grows it directly to the end-user then that is an area of exemption as well.”
Several citizen organizations are backing a proposed constitutional amendment for the November 2014 ballot that would allow the medicinal use of marijuana. They must submit nearly 700,000 signatures by Feb. 1 to get on the ballot. They have collected nearly 200,000. Attorney General Pam Bondi has petitioned the Florida Supreme Court to block the amendment from voters. The court has scheduled a hearing for Dec. 5.
If the initiative survives Bondi’s challenge, gets placed on the ballot and wins support of 60 percent of voters, then Floridians would be allowed to use marijuana to combat a variety of diseases and ailments.
“The expectation is if it’s legal to produce and legal to sell by the producer and it is a plant and if it is constitutionally authorized for medical use (then) I don’t think the department would question whether it was (an agricultural product),” said Bob McKee, an economist with the Department of Revenue.
If marijuana is classified as an agricultural product and the grower sells it directly to the consumer it would not be taxed. If the grower sells the product to a distributor then taxation becomes less clear unless marijuana is considered a common household remedy such as castor oil or milk of magnesia. Then it remains tax-free.
An agricultural classification would also effect property tax collections. However, the FIEC could not determine whether it would be a net gain or loss for local governments.
“It is going to be specific on that parcel of land and how that parcel of land is valued today,” Baker said. “When you grow medical marijuana on it, whether or not that adds more property tax or takes away property taxes are both possible outcomes.”
Since California first legalized medical marijuana in 1996, 19 other states have followed suit. It has led to an explosion of an array of products that include smokable buds, oils that are consumed orally, edible cakes and other products and ointments to ease skin or joint pain.
“There is a point where an item, once converted, loses its character as an agricultural product,” McKee told the FIEC. “Whether those specific products cross over to that point or not without examining the specific form in which it is sold it is hard to answer the question in a general fashion.”
McKee, the FIEC and representatives from the DBPR will try to tackle that question again Thursday morning.
Related Research:
* Oct. 21, 2013 EDR Notebook from the FIEC public workshop
* Oct. 28, 2013 Addition to the EDR Notebook from the FIEC public workshop
* FL Dept. of Revenue's Nontaxable Medical Items and General Grocery List
Reporter James Call can be reached at [email protected].
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