Tiny Rhode Island could become big marijuana market

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Shortly after introducing a bill last month to legalize recreational marijuana in Rhode Island, state Rep. Scott Slater received an interesting call from a local business owner.

The caller offered support for the bill, saying his company develops fertilizer from squid excrement that could potentially be used in cannabis cultivation.

“He told me ‘I hope your bill passes, we need this,’” Slater recalled. “There are so many industries created by marijuana, and that’s one reason why I think we have a good chance” at pushing through the recreational measure.

Indeed, hopes are extremely high in some circles that Rhode Island will become the first state in the nation to legalize recreational marijuana through its legislature (rather than at the ballot box) this year, as it would provide a sizable economic boost and create new business opportunities despite the state’s tiny population.

In fact, Rhode Island could become a huge hub for cannabis tourism at least for awhile, especially if no other eastern states legalize recreational marijuana in 2016.

The nation’s smallest state has had a successful medical marijuana program since the first dispensaries opened in 2013. By 2014, there were roughly 7,200 registered medical marijuana patients, a number that has since doubled to more than 13,000.

Two bills are now working their way through the legislature – Slater’s in the House and an identical one recently submitted in the state Senate. In addition to the legalization bills, Slater and State Sen. Stephen Archembault filed separate bills last week that would double the number of licensed medical marijuana dispensaries from the current three to six.

Similar recreational legalization bills have failed in the past, but with each effort legislators think their chances improve. The most recent bills came about after the state’s governor, Gina Raimondo, proposed a budget that called for taxing medical marijuana to pay for a seed-to-sale tracking system.

That didn’t sit well with the state’s medical marijuana industry or with Slater and his colleague in the state Senate, Joshua Miller, who submitted the recreational legalization bill in that chamber.

The governor’s administration “got a lot of pushback on that from people who thought it was unfair to tax people for medicine,” Miller said, adding he believes the governor is seriously considering the proposal. “I think we have not only a more serious and productive conversation, but they see we could get them out of some of the (budgetary) problems they’ve run into.”

Assuming the bills make it out of their respective judiciary committees, floor votes would likely be taken in May or June.

A Providence Journal poll last month found that 60% of Rhode Islanders favored legalization, while a Public Policy Polling survey from 2014 found 53% of state voters supported regulating and taxing marijuana like alcohol, compared to 41% who opposed the idea.

Under the bills, the state’s three licensed MMJ dispensaries – the Thomas C. Slater Compassion Center in Providence, the Greenleaf Compassionate Care Center in Portsmouth, and the Summit Medical Compassionate Center in Warwick – would be the first businesses allowed to sell recreational cannabis. They could begin sales six months after the law goes into effect.

The bills would allow up to 40 recreational marijuana stores. State regulators would have to start accepting license applications within 14 months from when the law is enacted and award licenses several months later.

Application fees would run $5,000, while license winners would have to pay registration fees of $10,000. Licenses would be up for renewal every two years.

The bill would also impose a 10% recreational sales tax and an excise tax of $50 per ounce. These would apply only to recreational cannabis sales, but not medical sales.

These are all only preliminary, and the final bill could look quite different as lawmakers tweak here and there throughout the process.

“That’s the best bill I felt we could offer, but if in hearings people want more or less shops or some kind of other changes, I’m willing to work with them,” Slater said.

Both Slater and Miller say their colleagues are increasingly open to legalization and an unprecedented number of lawmakers from both parties have signed on as co-sponsors, including Democrat Senate Majority Leader Dominick Ruggerio and Republican House Minority Leader Brian Newberry. Competition to be the first state in New England with recreational marijuana is also spurring the movement.

Massachusetts voters will likely vote on a legalization ballot referendum in November that many observers say has a good chance of passing, while in Vermont, a legalization bill just passed the Senate and will be taken up in the state House this month.

“A lot of Rhode Islanders are beginning to understand that if Massachusetts goes through with legalization that a lot of those who wish to access recreational marijuana in a legal set-up will just go over the border,” Miller said.

Slater, whose late lawmaker father led the charge to legalize medical marijuana in the state in 2006, and for whom the Providence dispensary is named, agreed.

“People are very open to it, especially with more New England states moving towards legalization,” Slater said. “A lot of people want Rhode Island to be a first mover to take advantage of the region.”

While marijuana activists are hoping for recreational legalization, one dispensary official described the state’s medical marijuana market as “robust.”

Christopher Reilly said the market received a big boost when the state undid a rule that limited dispensaries to having 99 mature plants and 51 seedlings at any one time.

“Those restrictions were very onerous because you could not meet the full demand of the patient community based on those plant allowances,” Reilly said, who declined to comment about legalization. “It’s been a God-send for the both the patients and the facilities,”

Omar Sacirbey can be reached at omars@mjbizdaily.com