Advocates want to change these 4 things in the state cannabis law next year

REP. DAVID MORALES, a Providence Democrat, speaks before cannabis advocates at a legalization anniversary party in Cranston on Dec. 1, 2023. RHODE ISLAND CURRENT / CHRISTOPHER SHEA)

CRANSTON – With infused drinks, charcuterie, and the blasting beats of Drake, a group of over three dozen industry advocates, leaders, and lawmakers gathered on a Friday night to celebrate the anniversary of the first legal marijuana sale.

The Dec. 1 celebration at an event space in Cranston’s Rolfe Square also served as a forum to discuss changes they want to see in year two: specifically around ensuring all Rhode Islanders have the chance to take part in this budding industry.

“The details are what matters,” Rep. David Morales, a Providence Democrat, told the crowd.

Morales was one of three Democratic lawmakers who spoke at the celebration. Also speaking, but via video, were Providence Rep. Enrique Sanchez and Pawtucket Rep. Leonela Felix.

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Since April, cannabis advocates have looked through the state’s 115-page law hoping to close loopholes they believe could create an unfair landscape in Rhode Island. During the celebration on Friday, they presented four proposals. Two require approval from the General Assembly and governor and two are under the control of the Cannabis Control Commission.

The first of four proposals is to revise the definition of what it means to be a “social equity applicant” — something the state’s Cannabis Control Commission, which formed last June, also hopes to narrow down in 2024.

Rhode Island’s cannabis law sets a cap of 24 retail licenses. Of those, six are reserved for social equity applicants and another six are reserved for worker-owned cooperatives.

The statute on social equity includes many definitions on what constitutes a disproportionately impacted area and ownership. Morales told the crowd that applicants only need to have at least 51% of their workforce be former drug offenders or residing in an impacted community, while the applicant does not have to.

“We don’t want a loophole saying if you are an out-of-state capitalist, with a ton of wealth that’s now coming out to the Ocean State, you can hire a bunch of poor Black and Brown folks and call yourself a social equity applicant,” Morales said of the 51% requirement. “That ain’t going to cut it — so we’re going to remove that language to the existing law.”

The other line that Morales and other advocates want to see cut from the original legislation: that applicants can apply for a social equity license if they demonstrate past experience promoting “economic empowerment in disproportionately impacted areas.”

“If Jeff Bezos decided to give $10,000 to the Southside Cultural Center, that would mean economic impact,” said Blake Johnson, an attorney for Green Path Legal, an all-female practice in Barrington that focuses on cannabis issues. “Let’s puff, puff, pass the bills.”

Advocates also propose that the General Assembly pass legislation that allocates roughly half of tax revenue from recreational cannabis toward the state’s fund meant to assist social equity applicants.

“We’re advocating for 50% of the tax revenue at first just in case we have to negotiate down,” Zara Salmon, founder of the Providence-based plant-lifestyle brand CRAVEInfused, said via text Monday.

Recreational cannabis sales were slow in the first four months before overtaking medial cannabis sales in the spring, according to figures from the state’s Department of Business Regulation. Total recreational sales from Dec 1, 2022, through Oct. 30, 2023, were $62.9 million.

DBR spokesperson Matthew Touchette said in an email Monday that the state Department of Revenue projects $76 million in total recreational sales by the end of the fiscal year on June 30, 2024.

Touchette said that would translate to roughly $13 million in state tax revenue and $2.3 million for local municipalities where dispensaries are located. As of December, there are seven licensed recreational dispensaries, with one each in Central Falls, Exeter, Providence, Portsmouth, and Pawtucket, and two in Warwick.

But the state’s social equity fund does not see any of that tax revenue. Instead, it is funded through an initial $125,000 initial license fee and other fines retailers might have to pay. As of Nov. 3, the fund had $1,013,500 from these fees.

“That’s supposed to support six social equity businesses,” Salmon told the crowd. “It takes about $2 million to $3 million to start a cannabis business.”

The group also called on lawmakers to expand the social equity fund to be accessed by prospective dispensary owners as a means to get startup capital.

Because cannabis is not legal on the federal level, most major banks are not willing to provide loans to prospective dispensary owners. That leaves cannabis entrepreneurs with few options, said Eve Santana, the founder of High Beautiful, a lifestyle brand focused on the positives of marijuana.

“The cannabis industry faces a dilemma of funding,” she said. “That is why we are asking the government to run us their coin.”

Both legislative proposals have the support of Felix, Morales, and Sanchez. Morales told the crowd that legislation will likely be filed in the House by mid-February. Who will be the lead sponsor is still being determined, he told Rhode Island Current.

Another way for social equity applicants to save money? Do away with licensing fees.

Fees can be very costly. Under the Rhode Island Cannabis Act, retail operations must pay a fee of $125,000 to the Department of Business Regulation in order to sell adult-use recreational marijuana, along with paying a yearly $500,000 licensing fee.

Salmon noted that if a social equity license were approved today, the business owner would not have any of that fee waived.

Cannabis advocates called for the Cannabis Control Commission to create new license types especially for applicants who live in communities of color or who were formerly incarcerated.

They want the state to offer “provisional licenses,” which would allow the state to perform thorough inspections on a business’ plan before offering an official license.

“In order for people to actually start a business, they have to have everything lined up,” Johnson said.

Christopher Shea is a staff writer for the Rhode Island Current.

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