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The Great Rhode Island Pot Buyout

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Economics

The Great Rhode Island Pot Buyout

Rhode Island is planning to increase the amount of medical dispensaries in the state from three to 15 — and one of the three dispensaries is offering millions of dollars for the state to cancel the expansion.  

Rhode Island’s largest dispensary is trying to get the state to cancel its plans to issue more medical cannabis dispensary permits, in exchange for a $5 million donation to help fill the state’s budget gap.

Chris Reilly, a spokesman for the Thomas C. Slater Compassion Center, said the dispensary could pay the state $5 million, with the stipulation that the state would forgo issuing the remaining 12 out of 15 dispensary permits.

The Providence Journal reported that Reilly pitched lawmakers on the deal this week.

“We’re very sensitive to the state and its challenges,” Reilly told members of the House Finance Committee, according to the newspaper. “And if there is a way to find the $5 million that you need to plug the budget hole that you need for the coming fiscal year, we’d like to be part of the solution.”

TCS Compassion, as proven by this attempt at keeping their chunk of the market, clearly isn’t a fan of the state’s plan to add more licensed dispensaries — to increase competition among dispensaries, slash prices, increase the number of products and strains being used to produce those products and improve access for patients. The state believes the plan for more dispensaries could be worth $5 million more in tax revenue annually.

Essentially, TCS Compassion is trying to give the state the equivalent of a year of revenue from the program so that it won’t increase competition.

The folks from TCS Compassion explained to lawmakers that the move to expand the number of dispensaries to 15 would be a major hit to the sustainability of their business, which already expected to take a hit when their neighbor, Massachusetts, begins adult-use sales this summer. Regulators in Rhode Island aren’t buying the Massachusetts argument quite yet, as they believe the loss will be minimal. Their reasoning is the pot up north will be more expensive and less potent.

According to the Providence Journal, Reilly told regulators he expected the new market to strain the program considerably and pointed to one community in Massachusetts that had plans for six dispensaries. (One could then argue that it’s not a good sign if a single town in Massachusetts plans on having twice as many dispensaries as the whole state of Rhode Island.)

Another Rhode Island dispensary, Greenleaf Compassion Care Center, agreed with Reilly, and said that the state’s current dispensaries have built business plans depending on a certain volume of patients, which would suffer if more dispensaries were added.

Seth Bock, CEO of the Greenleaf Compassionate Care Center, shared his concerns with lawmakers on the expansion, saying it “would almost ensure that one, maybe two, dispensaries would go out of business.” Bock also said 44 cents of every dollar he makes goes to surcharges and taxes. Bock told the Providence Journal he was hopeful lawmakers would add legal cannabis delivery service, but made the unfounded claim that technology needed to track drivers didn’t exist.

The state’s third dispensary, Summit Medical Compassion Center in Warwick, also weighed in. SMCC’s Terrence Fracassa didn’t understand why lawmakers thought more dispensaries were needed in the first place.

From his perspective, they’re currently meeting the needs of the Rhode Island patient community and, if they weren’t, they could just expand their cultivation operations.

The state’s top pot regulator, Norman Birenbaum, countered the dispensary arguments. He said that the fact 60,000 plants are tagged in Rhode Island homegrows and the dispensaries only having 10,000 combined is proof the market needs expansion.

“From a business standpoint I understand the impulse to continue to protect the market share that they have,” Birenbaum told the Providence Journal. “Proposed reforms are not being offered to fill a gap in the budget. They are not being offered to raise revenue or push the industry in a particular direction. They are being offered to address the very real problems we have in the medical marijuana program.”

We reached out to the Marijuana Policy Project, who helped pass Rhode Island’s medical law in 2004, to get their take.

“We don’t want to see existing medical marijuana providers fail, but a modest increase in the size of Rhode Island’s medical marijuana program will be beneficial to patients,” Morgan Fox, director of communications, told Cannabis Now.

TELL US, do you think dispensaries should lobby for less competition?

1 Comment

1 Comment

  1. Ana

    April 7, 2018 at 9:18 pm

    I think they just want to be lazy. More mmj dispensary’s in the area means more work to keep regular consumers. But what if they undergo a situation where they have more consumer than product. Where are the consumers going to go for their medicine??? Are we really supposed to just sit and deal with our health issues? Basically saying I don’t care about your issues I only care about your money, and that does not make the public happy. We are happiest when we think these people actually care. Not saying a situation like that would happen but what ifs are potential happenings sometimes. So again What If….

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