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May 27, 2022
On May 25, 2022, Rhode Island became the 19th state to legalize cannabis use for adults 21 years and older. The Rhode Island Cannabis Act (Act) creates a new 3-member Commission that will oversee the existing and operational medical cannabis program in addition to building an operational adult use cannabis program.
Similar to other recent legislation creating adult use programs, Rhode Island is seeking to provide opportunities to communities that have been disproportionately affected by the failed war on drugs by reserving a minimum of 6 retail licenses for “social equity applicants”. What is different about Rhode Island’s Act is that a definition of a social equity applicant is extended to include family members of individuals who were impacted by criminal drug enforcement efforts. This extension to include family members recognizes that drug enforcement efforts have had generational effects far beyond the specific individual who was arrested for drug-related offenses which makes it unique among recent legislation efforts.
The Act does not reserve licenses for social equity cultivation or manufacturing applicants but neither does it prohibit the Commission from creating such a carve out in its regulations. With respect to cultivation licenses, the Act actually imposes a 2-year moratorium on issuing cultivation licenses. Presumably the reasoning is that the existing medical cannabis cultivators can meet demand during the initial stage of the program. Once the moratorium is lifted, the Commission is permitted to issue additional cultivator licenses but any new licensee may not have more than a 10,000 ft2 canopy. The Act does permit home-grow with a household eligible to grow up to 3 mature cannabis plants.
The Act authorizes hybrid retailers that sell both medical and adult-use cannabis products so long as there is a clear delineation between medical and recreational products. The Act additionally authorizes issuing up to 24 retail permits of which 6 are reserved for social equity applicants and 6 reserved for a worker-owned cooperative applicants.
The Adult Use cannabis product sales will incur a 10% excise tax and a 3% local sales tax. The 10% and 3% is in addition to the existing normal 7% sales tax charged in Rhode Island on all other designated goods and services. The 10% and 3% in new taxes on adult use are not applicable to medical cannabis products and therefore should allow for the medical cannabis market to continue without cannibalization from the adult use market.
Adult-use cannabis will not be available in the Ocean State until at least August 1, 2022, as that is the earliest that existing medical cannabis operations can expand to produce and sell recreational cannabis products.
