Medical marijuana has potential to reduce Puerto Rico’s debt

San Juan, Puerto Rico

By Hannah Rank

Puerto Rico is about to welcome medical marijuana to the island.  The action, by executive order, could have potential economic benefits for the debt-ridden country. But it’s also recalling memories  of colonial exploitation.

Drug policy activist Rafael Torruella, who is based in Fajardo, Puerto Rico, worries the budding industry will mirror other industries on the island, where foreign investors reap most of the economic reward.

At this point, no medical marijuana is being grown on the island and no dispensaries have been authorized.

“If somebody’s going to grow it, it shouldn’t be pharmaceutical companies that they’re bringing in from outside,” Torruella, who is the executive director of the harm reduction NGO Intercambios Puerto Rico, said. “We wonder where the money’s going to go.”

In May 2015, the Governor of Puerto Rico, Alejandro Garcia Padilla, signed an executive order authorizing the use of marijuana for medical purposes after an attempt to enact legislation failed to pass the Puerto Rican House of Representatives. The order allows only for non-smokable forms of the cannabis plant.

The program is still in its very early stages. Two months ago, the Puerto Rican department of health issued a series of reglamentos, or regulations laying out the guidelines for growers, distributors and consumers of medical cannabis on the island.

The regulations outline strict qualifications, especially for growers and distributors. Authorized cannabis must be grown on the island, under specific, regulated conditions. The conditions include
“security measures and an electronic surveillance system” and “at least two security guards 24 hours a day.” Maintaining these highly-controlled growing environments poses a significant financial burden.

Rafael Torruella
Rafael Torruella, executive director of Intercambios Puerto Rico. His group focuses on decriminalization of drugs in Puerto Rico. (Hannah Rank/MEDILL)

“Most of the marijuana is not traditionally grown in Puerto Rico,” said Kris Fowlkes, director of commercial services for the Colorado-based marijuana consultancy Pinnacle Consultation. Fowlkes travels to Puerto Rico often and is in contact with people on the island interested in establishing the industry. “Almost all of their [illegal] marijuana right now is being imported. So that’s another skill set that they don’t actually have quite yet.”

Growblox Puerto Rico, a subsidiary of Nevada-based Growblox Sciences, recently set up shop on the island. They are currently working closely with the Puerto Rican government to gain the permits necessary to set up their first groweries there.

GrowBLOX Sciences regards Puerto Rico as an opportunity  for its indoor growing technology, the company wrote in a June 2014 press release announcing the subsidiary titled, “GrowBLOX Sciences, Inc. to Capitalize Heavily from Puerto Rico Legislation.”

According to the subsidiary’s CEO, César Cordero-Krüger, the company hopes to be operational by the end of 2016, depending how long it takes the local government to process its application.

When asked about Puerto Rico’s $77 billion debt and how Growblox could contribute to the local economy, Cordero-Krüger expressed optimism about the potential for the industry on the island.

“We could become basically, depending on investment done on the island, a major player on the medical side of business,” Cordero-Krüger said.

Though he says ultimately where the revenue from the subsidiary goes depends on the “final composition of equity partners,” Cordero-Krüger seemed hopeful the money will be reinvested back into Puerto Rico.

“I would say that for the subsidiary business, we would like to reinvest all of our money on the island,” Cordero-Krüger. “It makes sense from tax perspectives.”

Fowlkes noted the tax base for the medical marijuana industry takes a few years to build up.

In Colorado, whose medical and recreational marijuana industry has developed since 2001 and 2014 respectively, Fowlkes has seen many economic changes directly or indirectly tied to the industries.

Last August, Fowlkes explained, marijuana taxes generated more revenue than liquor taxes. According to politifact, in 2014 Colorado raked in about $60 million dollars in tax revenue for marijuana sales.

“It’s a really neat job creator also,” Fowlkes said. “You have more construction work being done, because people are building ‘grows.’ You have ‘grow stores’ that pop up, you have a whole secondary industry that follows marijuana. So when you talk about it being a $20 billion industry, where only 10 of it’s from growing the weed. So the other 10 is all the ancillary things that come along with it.”

From what Fowlkes has seen in his visits to Puerto Rico, many smaller communities are slow to warm to the idea of building a local medical marijuana infrastructure.

“In Puerto Rico, last time we were down there, Ponce was probably the only town that whenever I was speaking to people, that people were actually interested in it,” Fowlkes said. “Most of the other townships are a lot smaller, and so what they worry about is what other things are going to be sold inside the dispensary.”

A lot of the apprehension could have to do with the historic stigmatization and marginalization of drug use. Puerto Rico law classifies marijuana as a controlled substance, and illegal possession of any amount is punishable from two to five years in prison.

Torruella worries most about the potential for further marginalization. in the rules surrounding selling medical marijuana. According to the regulations, those who have been convicted of a crime – including drug possession or dispersion – cannot grow and distribute on the island.

“For 50 years communities have been devastated by the war on drugs – many of them for selling weed. And there were black and brown people doing this, and they’re still in jail for it,” Torruella said. “And now that it’s legal, white people are going to come and sell it to the black folks that were in jail?”

Photo at Top: San Juan, Puerto Rico. The island of Puerto Rico could benefit economically from new executive action legalizing medical marijuana. (Hannah Rank/MEDILL)