PROVIDENCE – Democratic legislative leaders say they are intent on passing legislation this year to legalize adult recreational marijuana use in the Ocean State. On Tuesday they took the first step, introducing a sweeping, identical bill in the House and Senate that would allow for up to 33 retail licenses distributed in six zones statewide.
“The time for Rhode Island to move forward with cannabis legalization is now,” said bill sponsor Sen. Joshua Miller, D-Cranston. “This historic shift in public policy will create a vibrant new marketplace in our state and end the failed practice of prohibition, which has caused such harm to so many in our communities.”
House sponsor Rep. Scott A. Slater, D-Providence, said, “It is the right public policy for Rhode Island to make cannabis possession and sales legal. We have been studying legalization proposals here for many years, and we now can look to our neighboring states’ experiences and see that taxing and regulating cannabis makes sense.”
Miller said that the recreational cannabis industry in the state is projected to yield about $20 million in its first year of operation. He would not speculate beyond its introductory year.
The legislation calls for a 10% state cannabis excise tax in addition to the 7% sales tax, plus a 3% local tax for the municipality at point of sale.
It would create an independent, three-member cannabis control commission that would eventually also assume oversight of medical marijuana, which is currently under the purview of the Department of Business Regulation. It also establishes a cannabis advisory board and a cannabis office within DBR.
The 33 retail licenses would include nine compassion centers that could potentially be hybrid recreational and medical retailers. If approved, hybrid retailers could be licensed and operational by Oct. 1.
A Social Equity Assistance Fund, funded through licensing fees and penalties, would aid applicants from communities disproportionately impacted by prohibition of cannabis. The fund would be administered by the cannabis control commission in consultation with a cannabis advisory board.
Miller said the Social Equity Assistance Fund would be partly funded through $125,000 license fees for the nine compassion/hybrid retailers. “That would equal over $1 million in funding,” he said.
Locally, communities must decide by resolution whether to put an opt-out referendum before voters on the November ballot. If a city or town opts out, it would be ineligible to receive cannabis revenue.
Miller and Slater said negotiators from both chambers had worked through sticking points before finalizing the 116-page legislation on Monday. Those sticking points included social equity provisions, expungement of drug convictions and regulation, including municipal control over retail stores and the involvement of organized labor.
House Speaker K. Joseph Shekarchi said, “The bill introduced today is not the final product – rather, it is the beginning of the public process of legalizing cannabis for recreational use in Rhode Island. We welcome input from the public as to whether or how we should implement recreational usage, and I expect robust discussions with House membership as well.”
Marijuana legalization could mean a revenue windfall for the state. According to a report by Grand View Research, Inc., a San Francisco-based marketing and research firm, the global marijuana market is expected to reach $70.6 billion by 2028.
David Spradlin, an executive at Warwick-based Ocean State Cultivation Center, told Providence Business News that annual recreational marijuana sales should generate north of $100 million in Rhode Island.
Senate President Dominick J. Ruggerio has said that the state should expedite the passage of the legislation, as consumers are already developing their buying habits in Massachusetts and Connecticut, where recreational marijuana has been legalized.
The Senate last year passed legislation to regulate and tax adult recreational marijuana use, but the House did not consider it. That measure did not have projected revenue numbers but called for a 20% tax on sales: a 10% marijuana tax, 7% sales tax and a 3% tax for the municipality where the cannabis retail store is located. It capped retail sales licenses at one license per 20,000 residents per municipality, and each of the state’s cities and towns would have been eligible for at least three retail licenses.
In his fiscal 2023 budget, Gov. Daniel J. McKee has proposed adult-use cannabis sales that would begin in 2023 and yield $8 million in revenue for an industry regulated by the Department of Business Regulation. It was not immediately clear whether McKee, whose office was part of early discussions with bill proponents, is backing the bill introduced on Tuesday.
A spokesperson for the governor did not immediately return calls seeking comment.
During the R.I. Legislative Leadership forum hosted by the Greater Providence Chamber of Commerce on Tuesday, Laurie White, the Chamber president, expressed concerns about the impact of legalization upon the state’s businesses.
White noted that a Chamber poll of its membership revealed that 50% were against the legalization of marijuana.
“Our interest in this is to ensure that the state’s employers have the latitude to set their own workplace policies,” she said.
One of the state’s cannabis cultivators, Spencer Blier, CEO and owner of Warwick-based Mammoth Inc., said he wants to see the state’s medical-use dispensaries given priority to be among the licensees to sell adult-use marijuana.
“Let the cultivators sell to the dispensaries operating in the recreational market, because an enormous percentage of customers are going to Massachusetts now because it’s more convenient and there are less barriers to access,” he said. “All the state cultivators and dispensaries are suffering.”
The legislation is expected to go before committees in both chambers before the end of March.
Rhode Island would join 18 other states in legalizing adult recreational marijuana use and sales.
(UPDATED throughout with details from press briefing.)
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.
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