PROVIDENCE, R.I. (WPRI) — Rhode Island’s state-licensed cannabis cultivators are outraged about a newly filed medical marijuana bill they fear will shutter their businesses.
House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio filed the two identical bills in their respective chambers last week, aiming to block Gov. Gina Raimondo from enacting certain regulations for the soon-to-be expanded medical marijuana program.
Raimondo’s proposed regulations would have blocked the six new compassion centers, approved by lawmakers last year, from growing their own cannabis. But the Mattiello-Ruggerio bill bars her administration from doing that, sending many of the 51 state-licensed cultivators into a panic.
“I can’t see how we could stay in business if the new centers will be able to grow,” said Domenic Passarella, a co-owner of Rhode Island’s Finest Gardens in Warwick. “It basically legislates us out of the market.”
Like many cultivators, Passarella said he and his four co-owners put their life savings — more than $1 million — into building the facility in Warwick. They were licensed by the state in 2017, and have been growing cannabis and selling their product to the three existing marijuana dispensaries, known as compassion centers.
The company manufactures some of its own products in addition to selling raw flower, but is only legally allowed to sell it to the medical compassion centers.
“It’s as good of a market as we can hope, right now,” Passarella said.
The three existing compassion centers — in Providence, Warwick and Portsmouth — grow their own cannabis on top of buying from cultivators, and they sell it to more than 18,000 medical marijuana patients. But the cultivators fear if the six new centers can also grow their own cannabis, there will be enough in-house product between the nine compassion centers to meet the demand — forcing the cultivators to close shop.
“Our lighting bills are close to $13,000 a month,” Passarella said. “Labor, lease, water, sewer, testing …. It doesn’t make sense to put all that money into a company that you have no place to sell the product.”
This isn’t the first time this issue has come up. When medical marijuana expansion was debated last year — as part of the 2019-20 budget bill — some House lawmakers expressed concern that the cultivators would be forced to shut down or sell on the black market if the budget article was approved.
The bill did pass, and six months later Raimondo’s Department of Business Regulation (DBR) released draft regulations for the six new centers. The regulations proposed making the centers retail-only, barring them from growing and forcing them to buy from cultivators. It also set up a lottery system for selecting the six centers, based on geographic zones throughout the state.
Mattiello and Ruggerio fired back with their new bill, introduced on the second day of the legislative session last week. It blocks DBR from limiting the centers from growing, and also from setting up the geographic zones.
The bill also fulfills a promise from the two leaders to repeal a controversial “legislative veto,” which would have given the General Assembly the final say over the Raimondo administration’s regulations. Raimondo filed a separation of powers lawsuit about that provision.
Mattiello and Ruggerio, in turn, argue that the governor is now the one violating the separation of powers, calling her regulations a “blatant overreach” by the executive branch.
“The administration is trying to change the law through its regulations, which is a violation of the separation of powers,” Mattiello and Ruggerio wrote in a joint statement in response to the cultivators’ concerns.
“The three existing compassion centers are able to grow and are limited by statute to their patient needs,” they continued. “The law the General Assembly passed last year contains the same statutory limitations that apply to the existing three centers. This creates an open marketplace and an equal application of the law.”
John Marion, the executive director of the good-government group Common Cause Rhode Island, says the legislature is creating a “false equivalency” between Raimondo’s regulations and the legislative veto.
“The General Assembly has publicly conceded that the ‘legislative veto’ they passed in June violates the separation of powers in the state constitution,” Marion said in an email. He says just because Raimondo “interpreted” last year’s marijuana statute differently from the General Assembly doesn’t mean she violated the constitution.
“Accepting that the governor’s interpretation is wrong, which is not clear, then all she has done is offend the statute,” Marion continued. “The legislature can easily remedy that by changing the statute (which they’ve proposed) or going to court. On the other hand, the legislature violated the people’s rights under our constitution. That is a more significant attack on the rights of Rhode Islanders. The two are not equivalent.”
Republican Minority Leader Blake Filippi criticized the new legislation on last weekend’s episode of Newsmakers.
“We are allowing compassion centers to vertically integrate,” Filippi said. He said the new legislation “undermines” the cultivators who were originally licensed to be the supply chain for the industry.
“I don’t think it’s fair, and I think it shows that we have a disjointed cannabis policy in this state,” Filippi said.
Cultivators knew they were taking a risk when signing up for the state-licensed growing program, many banking on the fact that the medical program would expand or recreational marijuana would be legalized.
“Nobody put a gun to our head and said, ‘Go and spend your money,'” Passarella said. “Also at that time, no one said, ‘We’re probably going to take this away from you in a couple years.'”
Passarella said Rhode Island’s Finest Gardens is likely to apply for one of the six coveted new compassion center licenses, which he says is the only way for the business to stay open if the new bill is approved.
Katie Sokol Ratkiewicz, president of the Rhode Island Cannabis Association, said in a statement that she expects a “huge oversupply of medical marijuana” as a result of the legislation.
A hearing on the House version of the bill is slated for Jan. 21 in the House Judiciary Committee.
Raimondo is expected to propose recreational legalization again this year in her budget proposal on Thursday, but Mattiello and Ruggerio have already indicated it’s essentially dead-on-arrival in the General Assembly.