State-Owned Marijuana Stores for Rhode Island?

Legislators consider the pros and cons.

February 13, 2020

PROVIDENCE, R.I.—Most New Englanders are familiar with shopping at one of the 79 state-run liquor stores in New Hampshire, and now legislators in nearby Rhode Island are wondering if that state-owned system would work for recreational marijuana stores, as well.

According to the Boston Globe, Rhode Island Gov. Gina Raimondo has proposed creating a network of government-owned pot shops, a plan that would make Rhode Island the first state in the nation to hold a monopoly on selling cannabis. The plan was unveiled as part of Raimondo’s annual budget proposal but received a lukewarm reception from the state’s lawmakers. Many lawmakers believe marijuana should be legal, but they have concerns about the once-banned product becoming the mainstay of a profit-motivated private industry.

“It’s untested waters, but I’m very excited to see a state even try it,” said Rosalie Pacula, a prominent drug policy expert and researcher at the University of Southern California. “There are a lot of reasons it’s really attractive from a public health perspective. It gives you a single entity, the state, that’s responsible for the testing, potency, pricing and labeling of products, and it’s so much easier to enforce those things and prevent diversion when the state is running the stores.”

Under Raimondo’s plan, state-run cannabis stores would open by March 2021, with revenue from taxes and fees projected to hit $21.8 million during that fiscal year. If implemented, 29% of revenue (after subtracting the cost of wholesale marijuana purchases) would go to the contractors operating the stores. An additional 61% would go to the state and 10% to the municipality. As in Massachusetts and most other states that have legalized marijuana, all products would come from private licensed growers and processors.

State-run stores would offer significant advantages, Raimondo says. First, as the only legal buyer in town, the state would have significant clout to extract good prices from private suppliers. Second, the government could heavily regulate store locations, marketing, advertising, branding, potency, packaging and selection, with officials slowly introducing products into the market only after studying them.

The most direct precedent for the proposal is found in Canada, where some provinces have added cannabis departments to their government-run liquor retailers. But with those operations only about a year underway, data is limited on the success of that model.

In the United States, 17 states (plus smaller jurisdictions within four others) impose some level of government control on liquor wholesaling or retailing, according to the National Alcohol Beverage Control Association.

According to Beau Kilmer, director of the RAND Drug Policy Research Center, studies suggest state-run alcohol sectors deliver better public health outcomes, in part because there’s less marketing. He believes there’s no reason states shouldn’t consider the same model for cannabis retailing.