It seems that political support for the legalization of recreational cannabis in Rhode Island may finally reach critical mass. The details of how Rhode Island could legalize recreational cannabis – rather than whether to do so – are now the subject of hearings and maneuvers at the Rhode Island State House.
Two bills are being discussed. Both would legalize the possession of certain amounts of marijuana for adults aged 21 and over, and both would organize a system of private retail locations to be licensed to sell recreational cannabis as early as the spring of 2022.
The first proposal, drafted on the direction of the Senate leadership and tabled by Senator Josh Miller and Majority Leader Michael McCaffrey, would create a new cannabis control committee to approve licenses and oversee the market, much like Massachusetts. Currently, approval for the medical cannabis regime, including growing plants, is the responsibility of the Office of Cannabis Regulation within the RI Corporate Regulatory Department. The Senate bill would also allow up to six “active” marijuana plants to be grown for a total of 12 plants.
A second bill, proposed on the instructions of the new Governor Dan McKee, was included in the administration’s budget proposal for the next fiscal year. The governor’s plan would tighten the cultivation of marijuana plants and prohibit people from growing cannabis at home (outside of certain registered growing areas for medical marijuana patients). The governor’s plan also continues a moratorium on additional licensed cultivation in Rhode Island based on the approximately 70 licensed growers who already grow cannabis in the state.
The Senate bill does not put a hard cap on the number of licensed retail stores that could be opened, so the market can theoretically determine that there is only one license cap of one per 10,000 residents for a parish for any parish – regardless of its total population – able to have at least 3 licensed retailers. There is an opt-out provision for local jurisdictions (if approved by a voter referendum), but municipalities that opt out would forego significant local tax revenue.
In contrast, the governor’s plan is to limit the number of retail stores nationwide to 25 per year for the first three years, using a two-tier lottery system that first selects women and minority companies for the first five licenses . and then a general lottery to randomly select the rest from those submitting applications.
A novelty of the governor’s lottery proposal is that existing compassion centers in Rhode Island would not have to participate in the lottery at all, but could receive a new hybrid license to sell cannabis for medicinal and recreational purposes. There are currently 3 licensed compassion centers (with 6 additional licenses expected to be issued by lottery in the spring). Under the governor’s plan, all nine pharmacies – the three currently three licensed and the six issued this year – will be allowed to see the hybrid license.
The Senate bill would create a process to eradicate previous marijuana crimes. The governor’s proposal does not do this, although he has spoken out in favor of the idea.
The governor’s plan includes a 10% excise tax and 7% sales tax on cannabis sales, as well as a weight-based excise tax. The total expected tax on cannabis purchases under this plan is approximately 20%. The Senate proposal also provides for an overall tax rate of 20% but is broken down into a local tax of 3% for the city where the store is located, plus a sales tax of 7% and a new consumption tax of 10%. The Senate bill also addresses the high barrier to entry for applicants – lowering application fees from $ 10,000 application fee and $ 500,000 annual fee for current Compassion Center licensees to $ 500 application fee and $ 20,000 license fee for retailers.
Among the expected winners, regardless of which proposal (if any) becomes law, are the roughly 70 currently licensed cultivators in Rhode Island. These farmers are currently prevented from selling their products to consumers in Rhode Island or across state lines, leaving them an extremely limited market. More retail stores to sell their inventory to could significantly increase farmers’ sales.
As these two proposals are causing significant debate in the State House, attention will soon be turned to the House of Representatives. The extent of support for legalization there is still somewhat unknown. House spokesman Joe Shekarchi said he was neither for nor against legalization and would hear the testimony when the bills are heard in committee. Shekarchi has previously said that he is “absolutely” open to the idea but has not made a commitment to support it.
Neither the governor’s nor the Senate’s proposal corresponds to what former governor Gina Raimondo had envisioned before leaving office as US Secretary of Commerce. The former governor’s 2020 budget envisaged legalization through a state-run retail store model, but neither lawmakers nor their successor have announced any intention to use that model.
The growing momentum in Rhode Island comes from lawmakers legalizing cannabis in a growing list of states, including New York and New Jersey. Neighboring Connecticut is also actively considering legalization efforts this year, and Connecticut Governor Ned Lamont added a cannabis legalization plan to his budget proposal earlier this year.
2021 could finally be the year of Rhode Island legalization. Stay tuned.