HOPKINTON — If voters in town choose to reject a November ballot question that asks whether to allow recreational marijuana sales in the community, it is a decision that could cost the town millions in tax revenues down the road.
The decision on whether any retail pot sales locations would be allowed in the community is out of the hands of elected officials, and Hopkinton Town Council President Stephen Moffitt Jr. is worried that voters may not be aware of how negative a “no” vote could be for local revenues and the budget, including the loss of a 3% return on every dollar spent purchasing marijuana at a local dispensary.
Matthew Santacroce, interim deputy director of the Rhode Island Department of Business Regulation, said during a presentation to the Hopkinton Town Council this week that educating the public is going to be up to local officials and legislators.
“We have been careful during this process not to take an advocacy position; that is not our job,” Santacroce said Monday evening. “Our job is to coordinate with business transparently in accordance with the law. What you are looking for is an advocacy effort and I think there is a critical role for legislators to play in that process.”
The presentation this week was made as the state tries to prepare communities to vote on the issue in the upcoming November elections and looks to streamline legalization by opening recreational sales in December.
Across Rhode Island, 31 of the state’s 39 municipalities have decided to let the voters decide the fate of sales in their community by going to referendum, including Hopkinton, Richmond and Charlestown.
Under the new law, the industry will be heavily regulated with oversight from the state, with legislators slated to establish a Cannabis Control Commission in early 2023. Towns will automatically opt in unless voters reject the establishment of such businesses at a referendum containing state-approved language. The language for town referendums across the state will be exactly the same, and was predetermined by the state as part of the legislative package passed in late May.
Each referendum, including Hopkinton’s, will read, “Shall New Cannabis Related Licenses for Businesses Involved in the Cultivation, Manufacture, Laboratory Testing and for the Retail Sale of Adult Recreational Use of Cannabis be Issued in the Town of (Hopkinton)?”
The recreational law allows individuals to keep 1 ounce on their person and up to 10 ounces and 3 plants at home, Santacroce said. Sales will begin in December at nine approved dispensaries in the state — five are already operating as medical sales facilities with four others slated to open in the near future — and all medical sales facilities will become “hybrid sales locations” effective Dec. 1.
“The thought is that if it starts with the nine compassion centers on Dec. 1, that will be at the nine existing licensed medical retailers in the state,” Santacroce said. “The theory is that they are already selling marijuana compliantly and so they can do so already safely and securely.”
The nine existing facilities are fairly evenly distributed across the state’s six regions to provide population-oriented access and to assure any medical patients are within 20 minutes of a recreational sales facility.
Once the Cannabis Control Commission is established, the body will then be tasked with establishing formal regulations and inspection protocols before then approving 24 additional sales locations across the state, which will ultimately result in four being assigned within the southwestern region of Rhode Island, Santacroce said .
For communities where recreational marijuana is sold, the state’s tax system will provide significant financial benefits. Under the state law, towns where pot is sold will receive 3% of the sales through a defined 20% tax system that mimics that used in neighboring Massachusetts. Under the system, the state tax and a secondary marijuana tax are also applied.
Santacroce said that early revenue estimates indicate the impact of such tax could mean as much as $2 million to $3 million for a town where sales take place. The town currently has two cultivators, listed in state records as CRI and THCBD, but does not have a medical sales dispensary.
Moffitt said he was concerned that the general public may not be aware of this information, and he indicated the same when he opposed the decision to send the measure to referendum in July. The referendum was ultimately approved in a 3-2 vote.
The primary concern, Moffitt said, is that those in the public may not be fully aware of the impact a “no” vote could have, and (the town) may not be able to reverse the impact once that happens.
“The ballot question does not tell the voter that there are financial implications to this decision,” Moffitt said. “There’s nothing there to indicate that if I vote no, it may cost me in tax revenue.”
Councilman Scott Bill Hirst expressed trepidation at the thought of a business opening and said his primary concern is that the state doesn’t “sell the town a false bill of goods” that would backfire on the local community.
“The town was burned on the solar tax revenues, and I think it’s important to note that the 3% could still change,” he said. “The people have been made a lot of promises that were never delivered, and they just got burned on solar when it was supposed to be an economic benefit.”