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Rhode Island Budget Proposal to Add Six New Medical Marijuana Dispensaries

June 19, 2019

The Rhode Island legislature released their budget proposal last week that will add six more medical marijuana dispensaries in addition to the three existing retailers. The proposal allows each of these new dispensaries to cultivate and manufacture their own inventory even though licensed growers lobbied for months for these to be retail only locations.

Cultivators Feel Betrayed

Lawmakers believe that this will be beneficial for everyone involved in Rhode Island’s medical marijuana industry. House Speaker Nicholas Mattiello pointed out that giving these dispensaries the authority to grow “will create a more open and fairer marketplace, as well as a higher-quality product at a lower price [and] a better market for cultivators.” Currently there are 46 cultivation businesses operating in the state and many industry professionals think this is excessive.

While this may improve access for medical marijuana patients, it could also create a surplus that could undercut existing cultivators. Antonio Barone, a member of the Rhode Island Cannabis Association, noted that, “Everybody is extremely frustrated. Why do we need six new compassion centers that can also cultivate?” The increase in competition is concerning for cultivators who employ between 15 and 20 people and do not want to see prices fall.

New Dispensaries Increase Access

As of  March, Rhode Island’s Department of Business Regulation said the state’s three medical marijuana dispensaries were expected to sell about $56 million worth of cannabis in fiscal 2019, which ends on June 30. This is a significant increase upwards of $17.8 million, or 46.6%, more than in the 2018 fiscal year. The new budget proposal will actually double the annual licensing fees to $500,000 placing even more financial burden on medical marijuana dispensaries.

While Barone was complimentary of the decision to improve access for roughly 18,200 medical marijuana patients he added that, “They slaughtered the growers in this budget.” If these new dispensaries were limited to only retail sales, this would have dramatically expanded the market for existing cultivators.

The new dispensaries will definitely result in increased sales and tax revenue for Rhode Island. The state expects  the medical marijuana program to generate about $6.16 million this fiscal year from the associated taxes and fees. Officials have confirmed that the application process will commence in September for the new dispensary licenses with the state awarding the first medical marijuana dispensary license in January.