The Governor of Puerto Rico issued an executive order on May 4, 2015 granting the legal use of marijuana for medical purposes. This legislation poses an interesting scenario when paired with the Act 20/22 laws of 2012. Legal medical marijuana is nothing new for the United States and its territories. Twenty-three states along with Guam and the US Virgin Islands have already outlined legislation to legalize marijuana for medical use but Puerto Rico is a special case.
Puerto Rico holds the trump card in the medical marijuana game. The US began adopting the legalization and regulation of marijuana for the obvious reason of trying increase tax base. What would happen to this tax base if US marijuana startups began moving to Puerto Rico to conduct business? Would these companies be exempt from State and Federal income taxes? What if only the downstream (end product) component was outsourced to Puerto Rico. What would the implications be?
Given Puerto Rico is an island of approximately 360 square miles, there is limited space to grow and cultivate the product in the upstream supply chain. However, as was seen in the 1990s, pharmaceutical companies are no stranger to the island and opportunities may exist to manufacture an end product here with great tax advantages. There is a great amount of uncertainty regarding how this will all play out but I have presented just one scenario to think about. It will be interesting to see how this all plays out in the coming months. It will all depend on how well Puerto Rico adopts and embraces the idea of medical marijuana. The regulations regarding growing, distribution, and sale of the product will be integral in determining Puerto Rico's role in the US scheme.
Puerto Rico holds the trump card in the medical marijuana game. The US began adopting the legalization and regulation of marijuana for the obvious reason of trying increase tax base. What would happen to this tax base if US marijuana startups began moving to Puerto Rico to conduct business? Would these companies be exempt from State and Federal income taxes? What if only the downstream (end product) component was outsourced to Puerto Rico. What would the implications be?
Given Puerto Rico is an island of approximately 360 square miles, there is limited space to grow and cultivate the product in the upstream supply chain. However, as was seen in the 1990s, pharmaceutical companies are no stranger to the island and opportunities may exist to manufacture an end product here with great tax advantages. There is a great amount of uncertainty regarding how this will all play out but I have presented just one scenario to think about. It will be interesting to see how this all plays out in the coming months. It will all depend on how well Puerto Rico adopts and embraces the idea of medical marijuana. The regulations regarding growing, distribution, and sale of the product will be integral in determining Puerto Rico's role in the US scheme.
