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Rhode Island Budget Proposal Seeks Recreational Cannabis Legalization

Recently, Rhode Island’s governor proposed the budget for 2023. It aims at creating a framework that allows recreational cannabis legalization.

On January 20, Governor Dan McKee of Rhode Island presented his Fiscal Year 2023 budget proposal. It includes legalization for recreational cannabis. “Today, we know there are still many pandemic-related challenges that we must once again come together to address—with our top priority being the health and safety of Rhode Islanders. At the same time, we have an historic opportunity to write Rhode Island’s next chapter now, with $1.13 billion in federal funds and an over $600 million surplus available to invest in our state’s future,” McKee wrote in the introduction of his proposal. “The decisions we make this year have the potential to bolster Rhode Island’s economic comeback and propel our state into the next decade with strength.”

His budget proposal is briefly covered in a brief press media presentation. Under “other items,” includes the mention of adult-use cannabis “Allows for controlled, phased-in introduction of retail licenses, results in minimal net revenue in FY 2023.” A more detailed executive summary goes into detail of the Fiscal Year 2023 Budget Proposal in nearly 200 pages of plans, with cannabis being mentioned in a few key sections.

“The governor recommends creating a strictly regulated legal market for adult-use cannabis in the state,” the executive summary states. “This proposal would create a weight-based excise tax on marijuana cultivation, an additional retail excise tax of 10 percent, and also apply sales tax to cannabis transactions.” The summary states that 25 percent of cannabis tax revenue and fees collected from licensing would be given to public health and safety programs. An additional 15 percent would be granted to local governments and the remaining 60 percent would go straight to the state general fund (a combination of cannabis cultivation excise taxes and retail sales excise tax, in addition to the state’s seven percent sales tax). According to the summary, $16.9million in general revenue is projected by the state after one year of sales.

The legislation proposal for legalization echoes similar states’ analysis of combating illegal cannabis sales. “Prohibiting the possession, cultivation, and sale of cannabis to adults has proven to be an ineffective policy for the State of Rhode Island,” it reads. “In the absence of a legal, tightly regulated market, an illicit cannabis industry has thrived, undermining the public health, safety and welfare of Rhode Islanders.”

Adults would be able to purchase and possess up one ounce of legal cannabis. They could also store up to five grams at home. This bill will take effect from April 1, 2023. In its current form, the proposal doesn’t allow home cultivation, and imposes consequences for those who might illegally cultivate plants at home. It requires 25 licensees to be licensed annually between 2023-2025 through a lottery system. A minority-owned company must receive five of the 25 licenses.

In the past there were divergent opinions among McKee and House representatives on how the state should approach legalization. For instance, while McKee’s most recent proposal directs responsibility of maintaining a state cannabis program to the Department of Business Regulation, other representatives have previously believed that a new department be created for the task.

At the start of the 2022 legislative session, Speaker K. Joseph Shekarchi stated that Rhode Island Congress is currently working to create a recreational marijuana program. “… We have also spent months analyzing the complex issue of marijuana legalization. House and Senate will have draft legislation available soon to serve as a guideline for public hearings. We may not be the first state to legalize marijuana, but our goal is to do it in the way that is best for all Rhode Islanders.”