Rhode Island yesterday became the 19th state to legalize marijuana for recreational use. Gov. Dan McKee, a Democrat, signed a bill that immediately allows adults 21 or older to possess up to an ounce of cannabis in public and grow up to three plants at home. State-licensed recreational sales are supposed to start on December 1, beginning with the state's three existing medical marijuana dispensaries. The law also requires automatic expungement of marijuana possession convictions.
"Rhode Island now joins the growing list of states that have prioritized common sense and justice over the status quo of a failed and nonsensical prohibition," said Erik Altieri, executive director of the National Organization for the Reform of Marijuana Laws. "The approval of legalization in Rhode Island is just the latest sign that the overwhelming majority of Americans want marijuana to be legalized and that their lawmakers are becoming more responsive to this growing public sentiment."
Rhode Island legalized medical marijuana in 2006, and legislators have been trying to go further for a decade. "It has been a long road, but I couldn't be happier with the result," state Sen. Joshua Miller (D–Cranston), who sponsored the legalization bill in his chamber, told The Providence Journal.
As of now, public consumption of marijuana will be legal in any place where cigarette smoking is allowed. But the new law authorizes local governments to restrict or ban the "smoking or vaporizing of cannabis in public places."
The law caps the number of retailers at 33, which amounts to about one store per 32,000 people. That's even lower than the ratio in California, where local bans have created a dearth of pot shops in several parts of the state. By comparison, according to a recent report from Reason Foundation (which publishes this website), Colorado has one licensed retailer per 13,838 residents, and Oregon has one per 6,145.
Rhode Islanders may find it easier to buy pot from black-market dealers or from stores in Massachusetts or Connecticut, both of which have legalized recreational use. Like California, Rhode Island will allow local governments to ban pot shops, but only through referendums and not in the three cities (Providence, Warwick, and Portsmouth) where medical marijuana is already being sold.
Recreational marijuana sales will be subject to taxes totaling 20 percent: a 10 percent cannabis-specific state tax and a 3 percent local tax, plus the standard 7 percent sales tax. Massachusetts collects a slightly higher retail excise tax (10.75 percent), but its general sales tax is lower (6.25 percent). Like Rhode Island, Massachusetts allows local governments to impose additional taxes up to 3 percent. In Connecticut, where licensed recreational sales have not begun yet, the state plans to collect a 3 percent retail marijuana tax, plus the standard 6.35 percent sales tax. An additional tax based on THC content will amount to between 10 and 15 percent.
Rhode Island's levies are modest compared to the taxes collected by some states. In California, for example, the state imposes cultivation taxes (currently $10.08 per ounce of flower and $3 per ounce of leaves) and a 15 percent retail excise tax, along with a general sales tax of 7.25 percent, which rises to an average of 8.82 percent when local levies are included. Local governments impose additional taxes on growers, manufacturers, distributors, and retailers.
All told, according to the Reason Foundation report, California taxes on marijuana range from $42 to $92 per ounce, depending on the jurisdiction, compared to an estimated wholesale production cost of $35 per ounce. That burden is one of the main factors that make it difficult for state-licensed marijuana merchants to compete with the black market, which still accounts for an estimated two-thirds of total sales six years after California voters approved legalization.
Rhode Island's combined 20 percent rate is somewhat higher than the 17 percent tax in Oregon, which has had notably more success than California in displacing the black market. But Rhode Island's total tax is substantially lower than California's combined levies and the 37 percent retail excise tax in Washington.
The day before McKee signed the Rhode Island bill, Delaware Gov. John Carney, a fellow Democrat, said he would veto a bill taking the more tentative step of eliminating civil penalties for possessing an ounce or less of marijuana. Carney said he was worried about the "long-term health and economic impacts of recreational marijuana use, as well as serious law enforcement concerns." Judging from the overwhelming support for that bill in the Delaware legislature, there are enough votes to override Carney's veto, although it's not clear whether that will happen.
In South Dakota, meanwhile, a legalization initiative has qualified for the November 2022 ballot. Voters in that state approved legalization of recreational use in 2020, but the initiative never took effect because of a lawsuit backed by Kristi Noem, South Dakota's Republican governor. Last November, the South Dakota Supreme Court agreed that the 2020 initiative violated the state constitution's "single subject" rule.