Puerto Rico is facing a time of turmoil and transition.
The U.S. territory is in the throes of a “fiscal crisis” — the island is more than $70 billion in the red — and also is struggling with a public health emergency amid the spreading Zika virus. The latter has spurred additional concern that it could dampen Puerto Rico’s tourism industry, “one of the few bright spots in an otherwise dismal economy,” CBS News reported earlier this year.
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Through all of this, Puerto Rico government officials also are quickly cobbling regulations for a newly enacted medical marijuana law with the anticipation of sales starting in early 2017. Proponents of the new industry say its emergence won’t be a salve for Puerto Rico’s deep economic wounds, but it could serve as a bright spot as the territory looks to regain its financial footing.
“As of now, there is almost $500,000 (in license- and permit-related fees), and that’s without sales even starting,” said Goodwin Aldarondo, a Puerto Rico-based attorney and president of Puerto Rico Legal Marijuana. “It’s the only viable and true option that we have on the table. There’s nothing as of now that’s generating money.”
The Puerto Rico government has yet to conduct an economic impact study about its medical marijuana program, health department officials previously said. The rough estimates being floated right now are for the industry — once it’s a couple of years in — to generate about $50 million in sales per month, said Aldarondo, who conducts medical marijuana seminars for physicians, attorneys and business owners interested in the field.
Factor in the proposed 11.5 percent sales tax, and that could mean close to $70 million annually that could be added to the island’s coffers. That figure does not account for revenues generated by ancillary businesses, medical tourism-related increases or any money saved from judicial-related costs, said Aldarondo, who previously spoke with the Industry Cannabis about aspects of this topic.
Political magazine Pasquines previously speculated on the potential economic impact:
Puerto Rico’s harsh penal system and current laws, with a minimum of two years in jail for marijuana possession, has been extremely costly to the islands. By legalizing marijuana, in addition to the millions of dollars in tax revenue generated, Puerto Rico would save tens of millions of dollars from the significant decrease in arrests, administrative and judicial costs, and costs of incarceration for those possessing the drug.
Much like in Colorado, the revenue would be a drop in the bucket, but Aldarondo says the potential is far greater than money alone.
“(The regulators drafting the marijuana laws) wants to focus on the patient, they want to focus on the conditions and the community,” he said. “(Residents) are very used to pills and they are really seeing this as an alternative. They’re starting to believe in it.”
Aldarondo believes that if the industry is up and running by December, it would be difficult for any newly elected governor to turn back the clock and dismantle the sector.
“First, it’s something that’s going to benefit the community,” he said. “Second, on the economic part, something that is generating revenue now without starting, it’s going to be very hard for you to take it away. It will be very hard in an economic crisis.”
Last week, William Dudley, president and chief executive officer of the Federal Reserve Bank of New York, addressed Puerto Rico’s economic situation during a press briefing:
Unfortunately, Puerto Rico continues to struggle under the weight of economic stagnation, employment declines and outmigration. This year, the government has been unable to make its debt payments on schedule and has lost access to the public debt markets. The pressures that culminated in these missed payments have been building for some time. This is an issue that we have been focused on for several years. We have published a number of reports in order to help highlight challenges and opportunities, to inform the discussion around solutions.
Earlier this month, the New York Fed published a series of articles via its Liberty Streets Economics blog about areas where Puerto Rico could restore economic growth: migration, labor force participation, education and household debt.
