Cannabis and the Law
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On May 24th, Governor Daniel McKee signed the Rhode Island Cannabis Act (the “Act”) into law, making the Ocean State the 19th state to legalize cannabis for adult-use. While adult-use retail sales will not launch in the state until on or after December 1, 2022, adults 21 and older can now legally possess up to one ounce of cannabis and grow up to six plants for personal use, only three of which can be mature. The following summary provides an overview of the key provisions under the Act.
Regulatory Oversight: Who’s In Charge?
The Act establishes a new independent regulatory body, the Cannabis Control Commission (the “Commission”), which will be responsible for overseeing the adult-use and medical cannabis programs in Rhode Island. The Commission will be comprised of 3 commissioners to be appointed by the Governor. The Commission will be authorized to issue licenses to cannabis cultivators, product manufacturers and wholesalers, retailers, and independent testing laboratories, and establish regulations for the industry. The Act also establishes a cannabis advisory board, which will consist of 11 voting members and 8 non-voting members, who will provide advice, recommendations, and proposals to the Commission. The Office of Cannabis Regulation (“OCR”) will be established after the final rules and regulations are issued and will serve as the administrative arm of the commission.
Licensing
Cultivation
If you are interested in obtaining an adult-use cultivation license in Rhode Island, you will have to wait for years, unless you are currently a medical operator in the state. The Act creates a moratorium on issuing new cannabis cultivator licenses until two (2) years after the final issuance of the Commission’s rules and regulations. This moratorium does not apply to existing medical cultivators, who will be permitted to cultivate, manufacture and process cannabis as a “hybrid cannabis cultivator” for both adult use and medical use after August 1, 2022, upon payment of a licensing fee in an amount to be determined by the OCR. Notably, upon the expiration of the moratorium, the Commission may, but is not required to, accept applications for new cultivators, however the canopy for each new cultivator is capped at 10,000 square feet.
Product Manufacturer or Wholesaler
Product manufacturers and wholesalers are permitted to obtain, manufacturer, process and package cannabis and cannabis products and deliver them to cannabis establishments but not to consumers. Applicants will be required to apply for a license in a form and manner to be prescribed by the Commission.
Hybrid Retailers
As with cultivation, the first adult-use retailers in the state will be the current medical operators. On or after December 1, 2022, a medical retailer, upon payment of a $125,000 fee to be deposited in the Social Equity Fund, is permitted to sell adult use cannabis for a period of one year. Following the final issuance of the Commission’s rules and regulations, hybrid retailers will be subject to the Commission’s rules and regulations for all sales authorizations and renewals, including any licensing requirements. The law also removes the non-profit entity requirement for hybrid retailers. The Act prohibits the commencement of adult use sales prior to December 1, 2022.
Retailers
In addition to the hybrid retail licenses, the Commission may grant up to 24 retail licenses after the issuance of the final rules and regulations. The retail licenses will be issued pursuant to geographic zones (listed below) and no more than 4 retailers exclusive of any hybrid cannabis retailers are permitted in each zone. Of the four retail licenses in each geographic zone, one (1) is reserved for a workers’ cooperative applicant, and one (1) is reserved for a social equity applicant, as defined below.
- Zone 1 – Burriville, Cumberland, Glocester, North Smithfield, Smithfield and Woonsocket.
- Zone 2 – Johnston, Lincoln and North Providence, Central Falls and Providence.
- Zone 3 – Coventry, Foster, Scituate, West Greenwich and West Warwick.
- Zone 4 – East Greenwich and North Kingstown, Cranston and Warwick.
- Zone 5 – Charlestown, Exeter, Hopkinton, Narragansett, Richmond, South Kingstown and Westerly.
- Zone 6 – Barrington, Bristol, Jamestown, Little Compton, Middletown, New Shoreham, Portsmouth, Tiverton and Warren and the cities of East Providence, Newport and Pawtucket.
A worker’s cooperative applicant is defined as an applicant organized and operated pursuant to Rhode Island General Laws s. 7-6.2, which is democratically controlled and operated by its workers.
Social equity applicants must meet at least one of the following criteria, as well as any additional criteria included in the final rules and regulations:
- An applicant with at least 51% ownership and control by one or more individuals who have resided for at least five of the preceding 10 years in a disproportionately impacted area (as defined in the law).
- An applicant with at least 51% ownership and control by one or more individuals who have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this chapter; or is a member of an impacted family.
- For applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who currently reside in a disproportionately impacted area; or have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under this chapter or is a member of an impacted family.
- Can demonstrate significant past experience in or business practices that promote economic empowerment in disproportionally impacted areas.
- Had income that does not exceed 400% of the median income, as defined by the Commission, in a disproportionally impacted area for at least five of the past 10 years.
To qualify for a retail license, an applicant must satisfy certain criteria to be established by the Commission, which includes but is not limited to, the following:
- Proof of tax compliance
- Demonstrate the proposed location for the retail sale of cannabis complies with municipal zoning laws or has been approved by the municipality
- Payment of $30,000 license fee to the OCR (to be deposited in the social equity fund)
Timing
The application forms, procedures, and requirements for the hybrid cultivation and retail licenses will be posted on the website of the OCR no later than October 15, 2022, at which time the application period will commence. Applications will be reviewed and approved on a rolling basis, however no hybrid retailer will be approved for adult use sales prior to December 1, 2022.
Criminal Justice and Social Equity
The Act also automatically expunges any prior civil violations, misdemeanor, or felony convictions for possession of marijuana decriminalized by the legislation.
In addition to the license set-asides described above, the Act contains several other social equity provisions including the establishing of a Social Equity Fund to offer business assistance, grants, as well as workforce development and job training, among other things. The Commission may also waive up to 100% of any license application fees for social equity applicants.
