State officials wrestle with economic impact of legalizing recreational marijuana

by | Jul 10, 2023

  • Florida economists are assessing the potential impacts of a ballot amendment to legalize recreational marijuana, considering factors such as sales tax revenue, the black market, law enforcement, and the existing medical marijuana industry.
  • The Smart and Safe Florida committee, supported by a $50 million investment from Trulieve, has gathered enough signatures to qualify for the ballot, but Attorney General Ashley Moody has challenged the ballot language.
  • If the amendment passes, it is projected to generate significant tax revenue and boost the state’s economy, while also raising legal and regulatory concerns, but it faces opposition from Governor Ron DeSantis, the Drug Free America Foundation, and the Florida Chamber of Commerce.

Florida economists working through the potential impacts of a ballot amendment to legalize recreational marijuana use are wrestling with a variety of questions ranging from sales tax revenue to black market impact, law enforcement questions and how the amendment might impact the legal and regulatory framework of the existing medical marijuana industry.

State officials met all day Monday at a Financial Impact Estimating Conference (FIEC) working through outstanding questions as they develop the framework needed to put together informed projections about how such a major legal shift might impact the state. The group has already shed some light on how the legalization of recreational marijuana might affect Florida’s economy.

The group’s current draft statement anticipates a significant increase in state and local sales tax revenue due to transactions in the legal retail market.  But there are a number of hurdles that have to be cleared long before that happens, starting with getting the issue on the ballot.

Currently, the Smart and Safe Florida committee, which is backed with a $50 million investment from medical marijuana company Trulieve, has already collected more than enough signatures to qualify for the ballot in November 2024. But Attorney General Ashley Moody, who opposes legalized marijuana, has filed a brief with the Florida Supreme Court challenging the ballot language, arguing that the wording is misleading to voters.

But if the amendment can clear the Supreme Court, and voters ultimately approve it by a 60 percent vote, then Florida’s legal retail market is expected to be fully operational about six months later, largely depending on how lawmakers choose to regulate the drug.

Amy Baker, the Coordinator for the state’s Office of Economic and Demographic Research, noted that the potential impact on the existing medical marijuana regulatory framework could also have legal implications.

“If the legislature didn’t act…the whole regulatory framework…goes away,” Baker said. “And if the legislature didn’t act, in my personal opinion, you’d be in the courts.”

The issue is complex, and would have far-reaching implications across a range of areas. But based on initial projections, the minimum annual increase in government revenues is estimated at $146.4 million, with additional revenue associated with new tourists drawn to the state by legalized marijuana expected to add an extra $43.6 million per year.

There are also considerations regarding costs. Regulatory changes at the Department of Business and Professional Regulation could cost $9.1 million annually, with an additional $1.5 million for startup. However, it is projected that new license fees will completely offset those expenses. The FIEC statement also noted potential savings from reduced marijuana-related crimes and incarceration costs, though some of those savings may be balanced by increased costs from a rise in DUI arrests. Similarly, the potential for more marijuana-related health issues was acknowledged, but the specific impact remains uncertain due to ongoing research and the fact that many prospective participants in the legal market are currently using marijuana illicitly.

Economic impact projections also pointed to a slightly positive influence on the state’s economy. The increase in revenue, income, and jobs related to the production and sale of recreational marijuana could cause Real Gross Domestic Product (GDP) to rise each year by an average of $3.8 billion, representing 0.32% of the annual total.

Governor Ron DeSantis and others, including the Drug Free America Foundation and the Florida Chamber of Commerce, have voiced opposition to the amendment.


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