Plenty of New Englanders have made a pit stop at one of New Hampshire’s state-run liquor stores.
Now, another state in the region is wondering: Why not state-run marijuana stores?
Governor Gina Raimondo of Rhode Island recently proposed creating a network of recreational pot shops owned by the government, a plan that would make the state the first in the country to hold a monopoly on selling cannabis to consumers 21 and older.
The plan, unveiled as part of Raimondo’s annual budget proposal, received a lukewarm reception from the state Legislature. But the state-run model is getting a serious look from policy makers in multiple states who believe marijuana should be legal but are wary of unleashing 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 percent of revenue after subtracting the cost of wholesale marijuana purchases would go to the contractors selected to operate the stores, with another 61 percent going to the state and 10 percent to the municipality. As in Massachusetts and most other states with legal marijuana, however, the products would be supplied by private licensed growers and processors.
Raimondo argues that state-run stores offer significant advantages.
First, as the only legal buyer in town, the state would have significant leverage to extract good prices from private suppliers. That would let policy makers fine-tune the retail prices paid by shoppers so they’re competitive with the illicit market — but not so low that they encourage greater cannabis consumption.
Second, the government could heavily regulate store locations, marketing, advertising, branding, potency, packaging, and selection, with officials slow-walking new products into the market only after studying them. State control also gives officials more visibility into the process of lab-testing products.
“This gives us the best tools, the strictest controls, and the most flexibility,” said Pam Toro, associate director of Rhode Island’s Department of Business Regulation.
The most direct precedent for the proposal can be found in Canada, where some provinces have added cannabis departments to their government-run liquor retailers. But with sales underway there for only about a year, there is little data so far on how well the model is working. In the United States, meanwhile, 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.
Beau Kilmer, director of the RAND Drug Policy Research Center, said studies suggest state-run alcohol sectors deliver better public health outcomes, in part because there’s less marketing. He said there’s no reason states shouldn’t consider employing the same model for cannabis.
“In other states, they’re just giving out a lot of licenses — that drives prices way down, and with all the competition you end up having a lot more advertising,” Kilmer said. “But if those states decide 10 years into it they want to do something else, it’s going to be hard to put the genie back in the bottle once you have all the marijuana firms and their lobbyists around.”
Critics of Rhode Island’s plan, however, are worried a state-run market would be unresponsive to the needs of consumers and medical marijuana patients, compared to private firms bent on innovation.
And then there’s federal law, under which marijuana is still illegal. While US attorneys have so far largely allowed states to legalize marijuana and regulate its sale by private firms, it’s unclear whether prosecutors would have the same hands-off attitude toward state-owned shops. Officials in Utah last year abandoned a plan to operate state-run medical marijuana dispensaries, in part because of fears the federal government might intervene or withhold unrelated funding as punishment.
Jared Moffatt, who heads the Marijuana Policy Project’s Rhode Island efforts, said he’s pressing legislators to include a private market in the law as a backup option in the event that federal officials challenge the state-run stores.
Raimondo officials said only the private contractors operating the stores, not state employees, would directly handle marijuana products.
Another concern raised by skeptics is that once legislators come to depend on the revenue derived from peddling vices, officials will implement increasingly permissive policies aimed at growing profits, their motivations little different from those of private actors.
“There’s a presumption that in a state-control model there’d be less commercialization,” Pacula said, “but I’m really not 100 percent sure that’s guaranteed, given what we’ve seen with state liquor stores and lotteries.”
In New Hampshire, the government monopoly on most liquor sales has long since morphed into a rather commercial enterprise; its stores boast their own highway exits and alcohol officials there speak openly about maximizing revenue. A similar capitalist creep can be seen in the heavy advertising conducted by various state lottery agencies, many of which are also pushing to expand into smartphone-based scratch ticket apps.
Rhode Island authorities say such worries are far-fetched, insisting their proposal is focused on tightly regulating cannabis sales, funding public health initiatives, and bolstering law enforcement efforts to crack down on the illicit market and detect stoned drivers.
Another portion of the money, several million dollars annually, would be earmarked to address the disproportionate enforcement of drug laws against people of color. A council appointed by the governor would make recommendations on how to spend that fund.
Critics, though, called that effort paltry and said a private, for-profit model with licensing preferences would best allow disenfranchised entrepreneurs to exert true ownership and build wealth. They also argued that successful private firms owned by people of color can more easily and aggressively invest in equity efforts or directly help other startups in a way the government cannot.
“We see business ownership as the vehicle to providing the most opportunities to start other businesses, to buy property, to uplift and revitalize our communities,” said Amber Littlejohn, a senior policy adviser to the Minority Cannabis Business Association.
Shaleen Title, a member of the Massachusetts Cannabis Control Commission, said Rhode Island’s plan holds promise in its potential to restrain the excesses of private corporations. But she called on Raimondo to do more to help rebuild neighborhoods and groups hit hardest by marijuana arrests.
“Taking away the profit incentive is a huge benefit for public safety and public health,” Title said, “but then the responsibility is fully on the state to use that model to make up for the disproportionate harm it caused certain communities with the enforcement of marijuana prohibition.”