By DANIEL KITTREDGE In a significant step toward the legalization of recreational marijuana, two local lawmakers last week submitted legislation in the Rhode Island Senate that would establish a regulatory and tax structure for retail cannabis sales. The
In a significant step toward the legalization of recreational marijuana, two local lawmakers last week submitted legislation in the Rhode Island Senate that would establish a regulatory and tax structure for retail cannabis sales.
The bill – developed and cosponsored by Senate Majority Leader Michael McCaffrey (D-Dist. 29, Warwick) and Sen. Joshua Miller (D-Dist. 28, Cranston, Providence) at the request of Senate President Dominick Ruggerio – now heads to the Judiciary Committee for a hearing.
There are other considerations ahead, including finding agreement with new Gov. Dan McKee – who included his own legalization plan in his budget proposal for the coming year – and House lawmakers.
But if the process goes as hoped, Miller said, the first retail sales of recreational marijuana in Rhode Island could take place about a year from now.
“We now have a track record in other states of how to implement this responsibly … The momentum in the majority on this legislation has only grown over the years on both the Senate and the House side,” Miller told reporters during a conference call prior to the bill’s formal introduction on March 9.
“Now is the time for it,” McCaffrey added.
During the conference call, Miller and McCaffrey repeatedly described their approach to marijuana legalization as “entrepreneurial.” They also cited the system in place in Massachusetts a model.
The bill would legalize the possession of up to one ounce of marijuana for Rhode Islanders 21 years of age and older. Homegrowing would be permitted, with a maximum of six actively growing plants and 12 plants total.
The legislation would establish a new five-member, full-time Cannabis Control Commission charged with overseeing a “regulatory structure similar to alcohol,” according to a fact sheet provided by the Senate.
Recreational marijuana would be taxed at a rate of 20 percent, a figure that includes the state’s 7 percent sales tax and a 3 percent local sales tax that would go to the community in which a retailer is located. The additional 10 percent would be a “special state sales tax.”
Cities and towns would have the ability to opt out of the recreational sales system through voter referendum, according to a press release regarding the legislation. In doing so, however, communities “would forgo their opportunity to garner a three percent local tax collected at point of sale.”
Miller and McCaffrey said cities and towns would retain the ability to regulate the location and hours of retail cannabis operations through local zoning ordinances, although they would not be able to impose additional fees or taxes.
“We want to provide cities and towns with the ability to opt-out, but we cannot allow an overly burdensome patchwork of regulation throughout our state,” McCaffrey said in the release. “We know from experiences in other states that less parochialism and lower fees leads to greater transparency and a more competitive market. If a community wants to opt-out and forgo tax revenue that is one thing, but we also need to make sure the process is open and transparent.”
The new regulatory system would provide for four separate kinds of licenses related to marijuana production and sales. A cultivator license would carry a fee ranging from a little as $100 to $20,000, while a manufacturer license would cost $5,000. The retail license would be set at $20,000, while a new classification, a testing license, would come with a $5,000 fee.
“As this opens up, we’re going to need a lot more testing of the product that’s coming into the state of Rhode Island,” McCaffrey said.
The same business entity would not be able to hold multiple classifications of license, according to McCaffrey and Miller, although principals could be shared among different companies.
An initial maximum of three retail sales licenses would be permitted for each community. Additional licenses would be available on a population-bases basis.
The senators also said they envision the state’s existing medical marijuana dispensaries – currently three, but with six more expected to be licensed by year’s end – being able to participate in the recreational sales system.
Miller highlighted the “social justice components” of the legislation, which include a new process for the free expunging of criminal records for marijuana-related charges.
Additionally, the fact sheet states that application and license fees would be directed toward a new Cannabis Equity Fund, “which will be used to provide technical assistance and grants to applicants from disproportionately impacted areas.”
In a press release regarding the legislation, Miller said: “Cannabis legalization is a monumental shift in public policy that effectively creates a new economy. We want to ensure as many Rhode Islanders as possible have the opportunity to participate in this new economy. That is why we set low, tiered licensing fees and we are also calling for the creation of a Cannabis Equity Fund to help individuals who have been directly and indirectly impacted by our past policy of prohibition.”
He added: “Over the years, I have sponsored legislation and led commissions, and we have all learned from the experiences in other states. The approach we are taking is not just about tax revenue. It’s about rectifying past wrongs and opening new opportunities. And it’s about smarter drug policy. Prohibition clearly didn’t work, and is next to impossible with the availability legal cannabis just over the state border.”
McCaffrey said in the release: “Cannabis legalization is as much about reconciliation as it is revenue. The Justice Reinvestment prison reform initiative showed that policies of prohibition have disproportionately impacted communities of color, and I believe we must ensure any effort to legalize cannabis recognizes and rectifies those wrongs. Low barriers to entry, expungement reform, and broad access to programs designed to increase access for individuals and communities impacted by the failed War on Drugs are an important and necessary component.”
The proposal differs significantly from former Gov. Gina Raimondo’s legalization proposal, which proposed a state-run system similar to New Hampshire’s approach to liquor stores.
During last week’s call, the senators said they anticipate McKee – who has also voiced support for a more privatized approach – to be receptive to their legislation.
“This is very entrepreneurial, and we expect it to be received well with those who have that priority,” Miller said.
McKee’s legalization plan, outlined as part of his budget proposal released last week, would provide for a similar tax structure – an effective tax rate of roughly 20 percent – and provide for the issuance of 25 retail sales licenses a year over three years. That would include five licenses in each year reserved for minority and women-owned businesses.
The governor’s proposal would keep oversight of the new recreational sales system within the purview of the Department of Business Regulation and maintain “local control” over marijuana activity in respective communities. It also seeks the “long-term investment of cannabis revenues” in several key areas, including affordable housing and health equity.
McCaffrey said he and Miller worked to take the concerns of legislative colleagues into consideration during the development of the legislation.
Asked if he believes the proposal would pass the Senate if it went for a vote immediately, he said: “I would think that we would, but we want to get the best product we can to the floor.”
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