Rhode Island’s Cannabis Control Commission released the draft version of the state’s inaugural adult-use regulations, paving the way for 24 new retail dispensaries. The proposed rules create a hybrid system of license approvals where applications are vetted before being allowed to enter a lottery.
The draft regulations were announced during the CCC’s Jan. 8 meeting. They must go through at least two 30-day periods before the commission can finalize them and open the application window for the new retail licenses.
“This meeting is a culmination of over a year of work,” said Commission Chair Kim Ahern. “My top priority as chair of this commission is to regulate cannabis in a way that is safe, equitable and transparent. I believe these regulations will do just that.”
Rhode Island’s legislature legalized adult-use cannabis in 2022, allowing for the creation of the CCC, which in turn was tasked with developing the regulations that would allow new entrants to the market.
The state already has seven vertically integrated companies that were originally permitted to sell medical cannabis before they were all permitted to also serve non-patient customers. Aside from those seven, there are two vacant licenses for vertically integrated companies and 60 independent cultivators throughout the state that are also permitted to serve both the medical and adult-use markets.
Four retail licenses will be available for each of the state’s six geographic regions, for a total of 24 new shops. Applicants are only allowed to submit a single application per region. In the event they are selected in multiple region lotteries, the applicant will have to chose one license to accept.
Two licenses per region will be reserved for general applicants, one will be social equity candidates and one will be for worker-owned cooperatives.
The licensing fee is $30,000 and must be paid annually. Social equity license winners will have their first year’s fee waived, with the price increasing by $7,500 every year until the social equity companies hit $30,000 after year five.
Social equity status requires that the applicant, or 51% of the applying company’s ownership, have a prior cannabis conviction, an immediate family member with a prior cannabis conviction, or spent five of the last 10 years living in a disproportionately impacted area in terms of drug prohibition enforcement.
Lottery vs. merit-based licensing approvals
The only point of contention between commissioners was the use of a lottery to select winners. Commissioner Robert Jacquard said that he thought a merit-based licensing system would be better, because it would theoretically reward the most qualified applicants.
“I have been in favor of a more competitive process,” said Jacquard. “I understand that the lottery has a role in the event that we are unable to decide on a competitive basis, what should be the winning applications for each of these licenses.”
Ahern said that while the CCC was crafting the proposed rules the commission consulted with other states in the hopes of avoiding some of the legal problems that other states have faced, such as New York and Minnesota.
“I’m grateful to the states we’ve talked to. It’s helpful as a chair to understand how to proceed,” she said. “I’ve come to the conclusion that it’s extremely challenging in a limited-license state to also do that in a merit-based way. Other states have been sued, and sued to great success.”
Applicants must submit a business plan that includes details about the applicants’ experience, funding sources and timeline for commencing operation. They must also submit a security plan and an operation manual.
Jacquard said he was concerned that some of the requirements for getting approved for a lottery were not specific enough.
“Some applicants will have a better business plan that others. Some applicants will have a better security plan than others,” he said. “But we won’t be able to consider which applicants have the better plan, only that they have a plan. I think that is unfair to the applicants who put the most work into this.”
Despite his reservations, Jacquard would vote along with his fellow commissions in approving the draft regulations.
“Obviously if you come to us with a scrap piece of paper done on a sticky note, you’re not going to make it through our application process,” said Ahern. “But when you get past that, it’s tremendously difficult to add a layer of subjectivity in that kind of review.”
The release of the proposed regulations opened a 30-day public comment window, which will close on Feb. 7. Until then, the public can submit comments electronically, through the mail, or during a public hearing that the CCC will host on Friday, Jan 24. The CCC could theoretically vote to finalize the regulations 30 days after the public comment hearing closes, but how long it actually takes is contingent on the amount of public comment that the commission would have to wade through when considering any changes.
