diff --git a/crates/compiler/test_gen/src/gen_refcount.rs b/crates/compiler/test_gen/src/gen_refcount.rs
index bc1e29266b..5e8933dbc9 100644
--- a/crates/compiler/test_gen/src/gen_refcount.rs
+++ b/crates/compiler/test_gen/src/gen_refcount.rs
@@ -96,13 +96,34 @@ fn list_str_inc() {
         ),
         RocList<RocList<RocStr>>,
         &[
-            Live(6), // s
+            Live(3), // s
             Live(2), // list
             Live(1)  // result
         ]
     );
 }
 
+#[test]
+#[cfg(feature = "gen-wasm")]
+fn list_str_slice() {
+    assert_refcounts!(
+        indoc!(
+            r#"
+                s = Str.concat "A long enough string " "to be heap-allocated"
+                list = [s, s, s]
+                List.dropFirst list 1
+            "#
+        ),
+        RocList<RocList<RocStr>>,
+        &[
+            // Still has 3 refcounts cause the slice holds onto the list.
+            // So nothing in the list is freed yet.
+            Live(3), // s
+            Live(1)  // result
+        ]
+    );
+}
+
 #[test]
 #[cfg(feature = "gen-wasm")]
 fn list_str_dealloc() {
diff --git a/crates/compiler/test_gen/src/helpers/wasm.rs b/crates/compiler/test_gen/src/helpers/wasm.rs
index 148bd7f251..8919342033 100644
--- a/crates/compiler/test_gen/src/helpers/wasm.rs
+++ b/crates/compiler/test_gen/src/helpers/wasm.rs
@@ -310,7 +310,14 @@ where
             RefCount::Deallocated
         } else {
             // Dereference the RC pointer and decode its value from the negative number format
-            let rc_encoded = read_i32(&inst.memory, rc_ptr);
+            let mut rc_encoded = read_i32(&inst.memory, rc_ptr);
+            if rc_encoded > 0 {
+                // We happen to be reading a list that is refcounted.
+                // This is the size on heap.
+                // Shift over 4 to and load the real RC.
+                rc_encoded = read_i32(&inst.memory, rc_ptr + 4);
+            }
+
             if rc_encoded == 0 {
                 RefCount::Constant
             } else {
diff --git a/crates/compiler/test_gen/src/helpers/wasm_test_platform.c b/crates/compiler/test_gen/src/helpers/wasm_test_platform.c
index dc430d33c0..60b6e429e3 100644
--- a/crates/compiler/test_gen/src/helpers/wasm_test_platform.c
+++ b/crates/compiler/test_gen/src/helpers/wasm_test_platform.c
@@ -53,9 +53,11 @@ size_t *alloc_ptr_to_rc_ptr(void *ptr, unsigned int alignment)
 
 //--------------------------
 
+size_t RC_LIST_INDICATOR = 1;
+
 void *roc_alloc(size_t size, unsigned int alignment)
 {
-    void *allocated = calloc(size, 1);
+    void *allocated = malloc(size);
 
     if (rc_pointers)
     {
@@ -64,6 +66,7 @@ void *roc_alloc(size_t size, unsigned int alignment)
         ASSERT(num_alloc <= rc_pointers_capacity, "Too many allocations %zd > %zd", num_alloc, rc_pointers_capacity);
 
         size_t *rc_ptr = alloc_ptr_to_rc_ptr(allocated, alignment);
+        *rc_ptr = RC_LIST_INDICATOR;
         rc_pointers->elements[rc_pointers->length] = rc_ptr;
         rc_pointers->length++;
     }