Medical marijuana has Florida officials talking new taxes

medical-marijuana-dispencaryTO TAX OR NOT TO TAX: State officials met Thursday to discuss medical marijuana tax options – just in case it gets on the ballot.

That’s a question voters could decide if a high-profile initiative makes it on next year’s ballot. In the interim, state officials are trying to determine if they can tax the drug — just in case it passes.

It could mean big bucks for state coffers.

State economists met Thursday at the Capitol for a Financial Impact Estimating Conference and peppered representatives from several state agencies with questions on possible sales-tax exemptions.

Under Florida law, prescription drugs and approved medical products used strictly for medicinal purposes are not taxable.

But Bob McKee, chief economist for the Department of Revenue, said that’s off the table.

“We believe (medical marijuana) does not fall under the legal definition of prescription drugs,” McKee said.

That’s because the Food and Drug Administration has not approved marijuana as a medicine partly because its dosage is difficult to determine. FDA standards require well-defined and measurable ingredients that are the same with each dose.

As to whether medical marijuana would be exempt as a common household remedy, like bandages, sinus relievers and laxatives, no one seemed to know.

McKee said that decision was up to the Department of Business and Professional Regulation. But a lawyer for DBPR said the agency didn’t have enough resources to give a definitive answer Thursday.

(Here’s a list of nontaxable medical items)

Complicating matters further was the question of whether medical marijuana could be considered an agricultural product.

Amy Baker, chairman of the FIEC, said as long as the same company that grows the marijuana also sells it to consumers, it would be an agricultural product and be exempt from the 6-percent state sales tax.

But if growers sell the drug to third parties or middleman dispensaries, the final sale would be a taxable transaction.

Nineteen other states have legalized medical marijuana. But according to a fee and tax report included in an earlier FIEC meeting, there has been no consistent taxing approach among states.

California does not consider medical marijuana a prescription drug and captured an estimated $105 million in sales tax revenue per year. 

A number of other factors also determine tax revenue, such as the number of registered patients, the average sales price, the amount consumed and the number of dispensaries. Application, registration and licensing fees also would apply.

Baker estimates anywhere between 175,000 and 450,000 Floridians likely would use medical marijuana.

But before any taxes can be collected, the proposed constitutional amendment first to to appear on ballot and win approval with 60 percent of the voters.

To get on the the 2014 mid-term ballot, advocates have to submit roughly 700,000 petition signatures by Feb. 1.

United for Care, the leading group behind the legalization effort, says more than 200,000 signatures have been collected since July.

John Morgan, a powerful Orlando lawyer and Democratic donor,  is the chairman of United for Care. Campaign finance records from the Department of State show Morgan has contributed $250,000 since July 31 to the political action committee running United for Care.

Florida Attorney General Pam Bondi opposes the amendment language and has asked the state Supreme Court for an advisory opinion. State Senate President Don Gaetz and state House Speaker Will Weatherford moved to oppose the legalization effort Wednesday.

The Florida Supreme Court will hear arguments Dec. 5.

Contact William Patrick at wpatrick@watchdog.org 

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