Rhode Island Budget Proposal Seeks Recreational Cannabis Legalization

The 2023 budget was recently proposed by the governor of Rhode Island, which aims to establish a legislative framework for recreational cannabis legalization.

Rhode Island Governor Dan McKee presented his Fiscal Year 2023 Budget Proposal on January 20, and includes recreational cannabis legalization. “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.”

In a press media presentation he briefly covers multiple topics included in his budget proposal. 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). The summary also states that after a full year of sales by fiscal year 2024, the state projects that it will collect up to $16.9 million in general revenue.

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.”

Legal cannabis would allow adults to buy and possess up to one ounce of cannabis, or store up to five ounces at home. The proposed bill is set to begin starting 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. In terms of licenses, it requires that 25 retailers should be licensed per year between 2023 and 2025, through a lottery system. Five of those 25 licenses must be granted to a minority-owned business.

In the past, there have been differing opinions between McKee and House and Senate representatives about how to approach legalization in the state. 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.

In the beginning of the 2022 legislative session on January 4, Speaker K. Joseph Shekarchi mentioned that the Rhode Island congress is actively working on crafting a recreational cannabis program. “… We have also spent months analyzing the complex issue of marijuana legalization. The House and Senate intend to soon have draft legislation ready which will serve as a framework to begin a robust public hearing process. 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.”