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NBC 10 I-Team: Is there a monopoly in the RI marijuana market?


NBC 10 I-Team: Is there a monopoly in the RI marijuana market?
NBC 10 I-Team: Is there a monopoly in the RI marijuana market?
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All one needs to do is sit and observe.

A constant beehive of activity swirls around Rhode Island's three state approved compassion centers: Greenleaf in Portsmouth, Summit in Warwick, as well as the largest, the Thomas C. Slater Center in Providence.

Parking is tight.

Patients briskly exit with their neatly packaged prescriptions.

Medically legal pot is still a cash business for most, but state regulators know how much the compassion centers are raking in.

In 2018, sales topped $38.3 million, according the state. Projections for 2019 will grow in excess of $52 million. Key players in those centers appear to be doing well for themselves.

Gerald McGraw Jr., from the Slater center, has got a $1 million waterfront view from his stately Cranston home over the bay.

But not everyone is making money in Rhode Island's legal medical marijuana market.

“It's unbelievable to me that I don't know where the next mortgage payment is coming from,” said a state-licensed cultivator.

The NBC 10 I-Team agreed to protect the cultivator’s identity, for fear of being black-balled.

“If it was a free market, I would absolutely show my face, but because it's not a free market, my business is so important to me, that I don't want anybody to be upset with what I've been able to say to you.”

The cultivators are like farmers. The program was supposed to help curb the black market.

While 74 have approved state applications, only 41 are actually licensed. Start-up costs are high. Buildings are rented or bought with private money. No conventional bank will back what the federal government still considers an illegal business. Many of the cultivation sites need expensive fire alarms and camera systems. The state’s Department of Business Regulation has 24-hour camera viewing access. Cultivators can only sell their product to the three compassion centers, which also grow their own plants.

Slater has the largest self-grow operation.

“Everyone that works in a center is making money on my dime, on my product, and we're not,” said the cultivator.

Here's what the cultivator is talking about. He sells his pot to compassion centers for about $3 a gram. Then, depending on quality and tier, the centers sell the pot to patients for as much as $18 a gram -- an astonishing 600 percent jump.

“Amazing,” said the cultivator.

In a system designed for patient care, Chris Sands, a physician assistant, helps the public get medical marijuana ID cards from his North Kingstown office of Medical Cannabis Consultants.

“To be honest, they're not patients, just customers. This is a tax-driven system,” said Sands.

Last year, the state deposited $5.1 million in general revenue from medical marijuana, according to revenue records. That number is sure to sky rocket if lawmakers pass Gov. Gina Raimondo's budget proposal for recreational adult-use pot sales. The state anticipates $14.3 million in gross revenue by the end of 2020. In that proposal, there is no cap on retail storefronts, but an increase of medical dispensaries from the existing three to a total of nine. That means in the near future, six of those nine medical dispensaries could be controlled by the current compassion centers.

“We're at a point where we're either going to create an industry or further a monopoly, and this budget is strictly furthering a monopoly,” said Sands.

Norman Birenbaum doesn’t see the argument that way. He oversees Rhode Island’s marijuana program as implementation director for the Department of Business Regulation. While he told the I-Team there is an imbalance in the market, he said 60 percent of the state's legal pot currently comes from cultivators.

“We have cultivators who are able to grow medicine that's needed, but there's not enough distribution, there's not enough shelf space. What we're saying is, let's create more shelf space,” he said.

Birenbaum wants to dispel the idea that the governor’s plan eliminates home grows, cutting out the caregiver program. While that’s true on the adult recreational side, home grows will continue to be an option for the state’s approximately 18,000 medical patients, he said.

Other key components of Raimondo’s proposal include: limiting the THC potency of products, tax revenue for public health and public safety, and municipal revenue sharing for communities (even if storefronts are banned by residents in some places).

“Rhode Island is actually in a really great position, with the total number of cultivators we have licensed and others that are approved to be able to fill this need, displace the illicit market, and make sure we are not being left behind in the rest of the region,” he said.

As for the cultivators, many had a rough 2018 and had to downgrade their footprints and lay off staff.

“Though none of my clients have totally gone under, many of them have had to scale back their operations considerably,” said Lisa Holley, who is an attorney for the Rhode Island Cannabis Association, a group of about 25 marijuana-related businesses.

Holley said there’s hope the market is on an upswing.

The cultivator who spoke to the NBC 10 I-Team on a condition of anonymity is hoping for change.

“I want us to have an opportunity to be able to properly care for our families.”

All three of the compassion centers were asked for interviews. Representatives of Summit and Slater declined. No one from Greenleaf ever responded. All three contribute heavily in their efforts to lobby state government, collectively $15,000 each month.

Secretary of State records show Slater pays the Bradford Group $5,000 a month, Greenleaf pays former state senator Stephen Alves $6,000 a month, and Summit pays Government Strategies Inc. $4,000 a month.

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