Cannabis policy reform in Rhode Island has spanned nearly two decades, starting with the legalization of medical marijuana in 2006. Then, after years of determined advocacy and legislative debate, the Rhode Island Cannabis Act was passed in May of 2022, making Rhode Island the 19th state to legalize cannabis for adult use. This article looks at the current state of the market, regulatory enforcement trends, highlights from the proposed adult-use rules, and the anticipated cannabis business licensing opportunities on the horizon.
Rhode Island Cannabis Overview
The Rhode Island Cannabis Act led to the swift implementation of hybrid licensing for existing medical operators, ensuring quick access to adult-use cannabis while mitigating the proliferation of the unregulated market. The Act also created the Cannabis Control Commission (CCC). Rhode Island’s cannabis program is currently in a transitional period, with the Office of Cannabis Regulation (OCR) overseeing the hybrid program. This authority will transition to the CCC upon the finalization of new regulations.
Current Cannabis Market: Hybrid Licensing & Cultivation Moratorium
The hybrid licensing process began in October 2022, allowing existing medical licensees to enter the adult-use market quickly by submitting an application and getting approved by OCR. Currently, Rhode Island has seven licensed hybrid compassion centers. Five of the seven licensees have hybrid grow operations.
Additionally, 60 cannabis cultivators hold licenses. This disproportionate ratio led to a two-year moratorium on new cultivation licenses to balance market supply and demand. After the moratorium, the Cannabis Advisory Board and the Commission will undertake a review to determine whether or not other cultivation licensees are required to satisfy market dynamics and the supply and demand within the state.
Regulatory Enforcement Trends in 2024
When considering entering a new market and looking ahead at how new regulations will be enforced, it’s important to look back at how they have been enforced in the past.
Recent enforcement actions highlight the importance of compliance:
A grower was fined $8,000 for failing to track trade samples given to employees.
Another grower was fined $10,875 for not properly testing quality control samples taken home by employees.
These actions demonstrate Rhode Island’s commitment to strict tracking and testing standards. More details about the enforcement actions are discussed here.
Highlights from the Proposed Adult-Use Cannabis Regulations
On January 8, 2025, the CCC released proposed regulations for adult-use cannabis. Key highlights include:
Concise Explanatory Statement: The CCC will prepare a “Concise Explanatory Statement” which includes its reasons for not incorporating changes suggested by the public (if necessary) and a description of any changes made between the text of the Proposed Rule and the text of the Final Rule.
Cannabis Equivalency Table: Provides what is one ounce based on each different product type. One ounce is important because that is the equivalency limit for the sale to an adult-use consumer. It’s important to be familiar with these measurements, as they will be incorporated into your point-of-sale system.
Edible and Ingestible Dosing Limits: A maximum of 10mg THC per serving, 100mg per package. For liquids in a multi-serving unit, it must have a resealable cap or closure to maintain child resistance compliance and must include a measuring device with the retail-ready product. Total tincture limits are 500mgs.
Retail-Ready Product Approval: Products must be approved as retail-ready cannabis products and added to a designation list prior to sale or distribution. The Commission will not approve a product if it receives information, data, or research that the product is not safe.
Restrictions on Appealing to Minors: Products shaped like humans, animals, stars, cannabis leaves, cannabis plants, or in bright colors will not be approved. Products resembling existing consumer products, including food, snacks, candies or beverages that do not contain cannabis will not be approved.
Vape Regulations: Only cannabis-derived flavors and colors are allowed.
Smokable Product Rules: A product will not be approved if it contains unapproved additives, including, but not limited to, cutting agents or chemicals, such as nicotine, caffeine, or any other substance not approved by the Commission.
Samples: Quality control samples and trade samples are permitted.
Packaging and Advertising Compliance: Any logo or graphic on retail-ready packaging cannot be larger than the required universal symbol. Cannabis establishments must take reasonable measures to ensure that advertising target audiences are 21+ years of age.
Formal Agreements Required for the Acquisition of Cannabis and Cannabis Products: A written executed contract or purchase order will be required for all sales or services and must contain specific terms.
For a deeper dive into the proposed regulations, watch this recorded session.
Rhode Island Cannabis Business Licensing Opportunities
Rhode Island plans to issue 24 new retail cannabis licenses through a qualified lottery system, with licenses distributed across six geographic zones. These include:
Social Equity Licenses: 6 licenses reserved for applicants disproportionately affected by cannabis criminalization. (one per zone)
Workers’ Cooperative Licenses: Unique to Rhode Island, supporting cooperative business models. (one per zone)
General Licenses: 12 licenses available to all qualified applicants. (two per zone)
Who Can Apply for a Rhode Island Cannabis Business License?
The term “applicant” is defined as “a Rhode Island resident or a business entity with a principal place of business located in Rhode Island to include, but not limited to, a corporation, limited liability company, limited liability partnership or partnership, and in which 51% of the equity in the business entity is owned by residents of Rhode Island, and the Rhode Island resident or business entity has made application for issuance of a license or certificate to own or engage in a cannabis business subject to the provisions of this chapter.” See R.I. Gen. Laws § 21-28.11-3
This residency requirement has already been challenged in a lawsuit in Rhode Island District Court, which argued that this violates the dormant commerce clause by prohibiting citizens of other states from applying in Rhode Island. The lawsuit was recently dismissed. It is anticipated that the partial residency requirement (51% ownership by Rhode Island residents) will remain.
Social Equity Applicants
The definition of a Social Equity Applicant is “an applicant that has been disproportionately impacted by criminal enforcement of marijuana laws, including individuals convicted of nonviolent marijuana offenses, immediate family members of individuals convicted of nonviolent marijuana offenses and individuals who have resided in disproportionately impacted areas for at least five of the last ten years, as determined by the Commission after consultation with the cannabis advisory board, and further specified in the rules and regulations that shall identify factors and other considerations to be evaluated in certifying applicants as social equity applicants, provided that such applicants shall at a minimum meet one of the following criteria:
An applicant with at least 51% ownership and control by one or more individuals who have resided for at least 5 of the preceding 10 years in a disproportionately impacted area.
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 business practices that promote economic empowerment in disproportionally impacted areas; or
Had income which 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 ten years.
Social Equity Applicants can apply as individuals or entities. We still have many questions about the final rules, such as the disproportionate impact area locations and whether the conviction must be in Rhode Island.
Application Requirements
Prospective applicants must prepare:
Business and financial plans
Inventory tracking plan
Financial plan (no minimum capital requirement is in place)
Proof of compliance with local and state regulations
Local municipal approval
Action Items for Potential Rhode Island Cannabis License Applicants
Determine Corporate Structure: Form your entity.
Secure a Compliant Property: Identify a location meeting zoning requirements.
Obtain Zoning Approval: Start the municipal approval process early to avoid delays.
Raise Capital: Now is the time to start thinking about how you will fund your operations.
Build Your Team: Identify people with unique skill sets to help you run your business. Also, if you’re a social equity applicant, a member of your team must meet the criteria discussed previously.
With the final rules expected soon, Rhode Island’s cannabis industry is poised for expansion. Entrepreneurs and investors should closely monitor regulatory developments and prepare strategically to take advantage of upcoming licensing opportunities.
H/T: www.jdsupra.com
