The demand for marijuana in Rhode Island has continued to increase since the legal sale of medical cannabis started. Medical marijuana sales news report by the Providence journal in July 2020 showed that Rhode Island compassion centers (dispensaries) sold about $53.5 million worth of medical pot in fiscal year (FY) 2019. This period was between July 1, 2018, and June 30, 2019. For the fiscal year 2020 (July 1, 2019, to June 30, 2020), the state’s compassionate centers sold medical cannabis, estimated at $59.7 million.
The Office of Cannabis Regulation of the Rhode Island Department of Business Regulation (DBR) regularly publishes data on the state’s Medical Marijuana Program (MMP). Its Industry Overview Reports show that Rhode Island has over 15,000 registered medical marijuana patients as of December 2022. In that month, the state began legal sales of recreational marijuana. This caused medical marijuana sales to dip just as recreational marijuana sales enjoyed a great start. In November 2022, Rhode Island sold $4.56 million worth of medical cannabis. In December, medical marijuana sales dipped to $3.99 million while recreational cannabis sold $3.4 million.
Earlier, Governor Dan McKee projected that the state would generate at least $17 million from recreational marijuana sales in the full year 2023, a period that would run between December 2022 and June 30, 2022. Similarly, the Marijuana Policy Project has estimated that recreational cannabis consumption in Rhode Island would generate an estimated $58 million yearly in excise and tax revenue. Other reports also projected that Rhode Island would sell about $80 million worth of recreational cannabis within the first year of legalization and $300 million by the fourth year.
DBR data for Rhode Island marijuana sales for the months between December 2022 and April 2023 support these lofty projections. Rhode Island dispensaries sold about $7.4 million worth of marijuana each month between December and February and then sales increased to $8.7 million and $8.4 million for March and April 2023. Out of these totals, recreational marijuana accounted for $3.4 million, $3.5 million, $4.26 million, $5.38 million, and $5.39 million respectively.
Medical marijuana and recreational marijuana are subject to tax in Rhode Island. The state imposes a 7% sales tax on medical marijuana but exempts it from state and local excise tax pursuant to Section 44-7-4 of the Rhode Island General Laws. Effective December 1, 2022, the enactment of HB 7593, Substitute A, as amended, implements a local cannabis excise tax and a state cannabis excise tax on the sale of adult-use marijuana and cannabis products by licensed marijuana retailers. Recreational marijuana in Rhode Island is also subject to sales and use tax.
When a retailer sells recreational cannabis or cannabis product in Rhode Island, such product is subject to the following taxes:
3% local excise tax
10% state excise tax
7% sales tax
Rhode Island distributes marijuana taxes as follows:
Revenues collected from the sales tax are deposited into the General Fund
Local cannabis excise taxes are collected and distributed on behalf of municipalities where marijuana products are delivered to buyers
State cannabis excise taxes are deposited into the Marijuana Trust Fund and used to fund programs and activities related to the following:
Revenue collection and enforcement
Prevention of substance use disorder for youths and adults
Treatment and recovery support services
Education and awareness campaigns, including public awareness campaigns on driving under the influence (DUI) of marijuana
Public health data collection, monitoring, surveillance, and research
Training and technology improvements for law enforcement
The Division of Taxation of the Rhode Island Department of Revenue (DOR) is responsible for collecting cannabis excise and sales taxes from marijuana businesses in the state. The Division requires retailers who sell cannabis and marijuana products to final consumers to collect, file, and pay cannabis taxes. Cannabis retailers must file and pay for state and local cannabis excise taxes on or before the 20th day of each month for the previous month's sales.
Medical marijuana sales in Rhode Island are not subject to the new state and /or local cannabis excise tax. However, the Division of Taxation requires hybrid cannabis retailers and compassion centers to continue to file and pay the 4% Compassion Center Surcharge Returns and monthly sales tax returns. The Division metes out appropriate penalties on cannabis retailers who file cannabis excise taxes late or fail to file them.
Contact the Division's Excise Tax Section at (401) 574-8955 or via email for inquiries on Rhode Island state and local cannabis excise taxes and sales and use taxes. Alternatively, for in-person inquiries on cannabis taxes, visit the Division of Taxation at:
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908