Alert May 26, 2022

Rhode Island Becomes the 19th State to Legalize Recreational Cannabis

On May 25, 2022, Rhode Island Governor Dan McKee signed the Rhode Island Cannabis Act (the “Act”) into law, which legalizes recreational cannabis in Rhode Island.

Some key highlights of the Act include the following:

  • Possession and home growing of cannabis is now legal for adults over the age of 21;
  • Past civil or criminal cannabis possession charges will be automatically expunged;
  • Existing medical cannabis cultivators and retailers will be able to pay a fee in order to cultivate and sell cannabis for adult-use;
  • Municipalities can opt out of the adult-use industry, except in areas that currently have medical cannabis dispensaries;
  • Adult-use sales will begin on December 1, 2022; and
  • Adult-use cannabis will be taxed at 20% tax rate (split up into a 10% cannabis tax, 7% sales tax, and 3% local tax).

The New Regulatory Framework

The Act creates a three-member Rhode Island Cannabis Control Commission (the “Commission”) to be appointed by the governor with input from the House Speaker and Senate approval. The Commission will be responsible for, among other things; (1) adopting, amending, and repealing rules and regulations for the implementation, administration, and enforcement of the Act (the “Rules and Regulations”); (2) determining which applicants shall be awarded licenses under the Act; and (3) establishing the process and methodology for awarding licenses. 

The Commission will be assisted by a Cannabis Advisory Board, comprised of 11 voting members and eight non-voting members, and the Office of Cannabis Regulation in the Department of Business Regulation. The Cannabis Advisory Board will collaborate with the Commission and the administrator of the cannabis office to advise and issue recommendations on the use, commerce, regulation and effects of recreational and medical cannabis within the state.

Automatic Expungement of Past Convictions

One of the most notable provisions of the Act is a provision providing for the automatic expungement of prior civil or criminal cannabis possession charges. Recognizing the harm caused by decades of prohibition, the bill’s sponsors included a process that gives courts until July 1, 2024 to automatically expunge prior convictions, and those who want their expungement sooner may request it and have costs waived. Under the legislation, any prior civil violation, misdemeanor or felony conviction for possession of marijuana that would be decriminalized will be automatically erased from court record systems. 

Licensing

The Act establishes several license types described below. All licenses are effective for one year from the date of issuance, with renewal licenses issued within 30 days of receipt of a renewal application and renewal license fee from licensees in good standing. All licenses require applicants (1) be Rhode Island residents1, (2) be over 21 years of age, and (3) pass a criminal record background check, among other requirements. Conviction for cannabis-related offenses will not be an automatic barrier to obtaining employment or licensure to participate in the legal cannabis industry. The Cannabis Control Commission may recommend to the General Assembly that licenses be issued for social consumption sites, cannabis delivery services and other categories.

Cannabis Cultivator Licenses

Cannabis Cultivator Licenses allow for the cultivation, processing, packaging, and delivery of cannabis to cannabis establishments, but not to consumers. There will be a moratorium on the issuance of new cannabis cultivator licenses until two years after the final issuance of the Rules and Regulations by Commission. This moratorium does not apply to existing licensed medical cannabis cultivators. Starting August 1, 2022 any licensed medical cannabis cultivator can pay an additional license fee (to be determined by the office of cannabis regulation and reviewed by the Commission) to be permitted to cultivate, manufacture and process cannabis for recreational use. At the end of the two-year moratorium, the Commission may issue additional cultivator licenses.

Cannabis Product Manufacturer Licenses

Cannabis Product Manufacturer License allow for the obtaining, manufacturing, processing, packaging, and delivery of cannabis to cannabis establishments but not directly to consumers. This license also applies to cannabis processors and wholesalers. Manufacturer licensees may only transfer or sell cannabis products to wholesale entities with this same license.

Hybrid Cannabis Retailer Licenses

Beginning December 1, 2022 Licensed Compassion Centers (licensed medical cannabis dispensers as designated by Rhode Island General Law §21-28.6-12) may begin selling cannabis for recreational purposes upon payment of a $125,000 Hybrid Cannabis Retailer Fee. There are currently nine approved compassion centers, three of which are currently operational and six of which are predicted to open by December 1, 2022. 

Cannabis Retailer Licenses

After issuance of the final Rules and Regulations, the Commission can issue 24 additional retail licenses subject to restrictions intended to (1) distribute retailers evenly across six predetermined geographic zones and (2) provide one license to a “workers’ cooperative applicant” (employee owned businesses that share profits equally among all employees) and one license to a “social equity applicant” (individuals disproportionately impacted by the war on drugs) in each geographic region. Social equity applicants will be eligible for fee waivers, grants and technical assistance. Licensed retailers will be required to establish a labor peace agreement with a union.

Cannabis Testing Laboratory Licenses

A licensed cannabis testing laboratory can transport, store, possess and test that cannabis is in compliance with necessary regulations.

1 A similar in-state residency requirement in the Maine cannabis regulations is being challenged on constitutional grounds. The case is Northeast Patients Group d/b/a Wellness Connection of Maine et al. v. Kirsten Figueroa et al., case numbers 21-1719 and 21-1759, in the currently pending in the U.S. Court of Appeals for the First Circuit.