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January/31/2020

Rhode Island Governor Gina Raimondo is campaigning for an unusual adult-use legalization plan, which is focused on government-owned stores being run by private contractors claiming that it would provide marijuana entrepreneurs with modest business opportunities.

The governor’s move shows the increasing pressure to legalize recreational marijuana along the East Coast. In 2018, Massachusettes legalized adult-use marijuana. New York, Connecticut, and New Jersey governors are ramping up their legalization efforts.

Late 2018, Rhode Island Governor started talking about the possibility of legalizing recreational marijuana since all their neighbours either have it legalized or are also looking to have it legalized.

Rhode Island is losing revenues, and economic opportunities to the neighboring state, Massachusetts, whose recreational marijuana program has a slow start but right now it picking up.

The legislation calls for private growers, processors, and contractors licensing, which would allow them to manage the retail outlets. The bill does not provide a cap on the number of licenses to be issued.

The private contractors would obtain medical marijuana products from private growers and processors. They would also receive a payment from the state for running the state-owned retail outlets. The fee given to the private contractors is based on the sales generated by the store.

Rhode Island recreational market would remain small in the beginning, generating a total of $35 million in the first financial year starting July 1. According to the draft bill, the program would be launched on 1st January 2021.

Raimondo was applauded by the marijuana industry experts for backing recreational marijuana legalization after their efforts failed in 2019. They also said that the proposal raises some legal questions and that the likelihoods of it passing the state Legislature as it is is small.

The governor’s ideas coincides with the bout of over the control of the medical marijuana program between her administration and the Democrat-controlled Legislature.

In December, the State Senate leaders said that they are not in support of recreational marijuana legalization within Rhode Island as it could corrupt their youths.

In her budget, the governor included $21.8 million in tax proceeds from recreational marijuana legalization in her annual budget to demonstrate her determination in legalizing marijuana.

Marijuana Policy Project campaign coordinator Jared Moffat said that they are happy to see the governor take the initiative on recreational legalization of marijuana. Moffat noted that it is frustrating to sit on the sidelines while Massachusetts collects revenue from Rhode Island in the form of marijuana sales.

MPP is investigating if the people operating the government-owned business would face legal issues, Moffat said. In 2019, Utah abandoned a plan seeking to establish state-owned medical marijuana dispensaries after the county lawyers found that the employees would be at risk of being persecuted under federal drug laws.

Moffat further said that he likes the Rhode Island plan as it includes a governor appointed Community Equity and Reinforcement Council responsible for creating diversity and economic opportunities within the industry.

According to the proposed plan, 61% of the tax proceeds of recreational marijuana sales would go to the government, while licensed private contractor would receive 29%, and 10% would be given to the municipalities.

Currently, Rhode Island has three licensed vertically integrated medical marijuana dispensaries that can cultivate cannabis, but the dispensaries also rely on the 51 individual marijuana cultivators.

The president of the Marijuana Association in the state, Katie Sokol Ratkiewica, said that cultivators might be favored by the adult-use plan. The association represent weed growers and is also fighting to maintain a cap on the amount of marijuana the dispensaries can grow.

Over the next five month, the state will be holding hearings on the governors budget proposal, the deadline for approving the legislation is 3oth June which is also the last day of the financial year, but there is the possibility of extending the process.

Moffat further said that is a likelihood that the budget will not be approved despite the Democrat-controlled Legislature because Republicans and the moderate Democrat might be against the state-owned retail stores.