Cannabis Establishment Applications, Licensing and Renewals

In accordance with the 2022 adoption of the Rhode Island Cannabis Act (“RICA”) (R.I. Gen. Laws Chapter 21-28.11) and the 2022 amendments to the Edward O. Hawkins and Thomas C. Slater Medical Marijuana Act (“Medical Marijuana Act”) (R.I. Gen. Laws Chapter 21-28.6), the Commission has proposed the adoption of 560-RICR-10-10-1 as part of the transition of the cannabis regulatory program from the Department of Business Regulation (“DBR”) to the Commission. 

This regulation sets forth the licensing requirements for all cannabis establishments licensees, encompassing both existing license types currently regulated by DBR and new license types established by the RICA. Starting with the existing regulatory content for compassion centers and cultivator licensees in DBR’s Medical Marijuana Regulation, 230-RICR-80-05-1, the Commission has created a streamlined licensing regulation applicable to all regulated license types. The regulation begins with general requirements applying to all license types, where the Commission consolidated all common licensing requirements in § 1.3 to avoid repeating the same language for each of the different license types.  This is followed by independent sections for each new license type, including updated requirements for compassion centers and cultivators to maintain compliance with the RICA and the regulation of adult use cannabis.  The regulation also contains provisions for the certification of social equity applicants, as well as the program requirements of the Social Equity Assistance Program and Fund.

Summary of the proposed regulation and explanation of changes to the status quo. 

§ 1.2, Definitions- Existing definitions from the DBR Regulation, 230-RICR-80-05-1.1.1, that were relevant to licensing were added to this regulation, in addition to cross referencing all applicable definitions in the Cannabis Act (“RICA”), the Medical Marijuana Act, and the Commission’s three other proposed regulations. Existing definitions were updated and modernized as necessary to reflect current and best practices, and new definitions were added, which include: applicant, approved social equity applicant, commercial cannabis identification card, commercial cannabis cardholder, economic empowerment, four hundred percent of the median income, full time employee, resource, resource applicant, and vertically integrated compassion center.  

§ 1.3 General Requirements for All Cannabis Establishment Licensees

§ 1.3.1, Application Requirements for Cannabis Establishment Licensees - The Commission worked with the staff of DBR’s Office of Cannabis Regulation (“OCR”) to review the existing requirements for compassion center licensees (see DBR Regulation, 230-RICR-80-05-1.2), which is currently the only type of cannabis retailer in Rhode Island, and created a streamlined and updated list of requirements for all retail licenses, which reflects improvements identified by DBR, the requirements set forth in the Cannabis Act and policy decisions made on certain points by the Commission in order to effectuate the vitality of the market while protecting the health and safety of the public. § 1.3.1 is the foundation of all cannabis establishment license applications, ensuring consistent requirements for applications across all license types. There are no significant changes to the status quo for application requirements, but requirements have been simplified and clarified. 

§ 1.3.2, Disclosure and Divestiture of Prohibited Financial Interests and Relationships – This subsection represents an incorporation and updating of the disclosure requirements currently stated in the DBR regulations applicable to compassion centers and cultivators (see 230-RICR-80-05-1 §§ 1.2(F)(7) & 1.3(F)(5), and 230-RICR-80-05-3, Disclosure Requirements Regarding Public Company Interest Holders in Marijuana Establishment Licensees). Starting with the language in the existing DBR regulation, and, in accordance with amendments to the Medical Marijuana Act and the requirements of the RICA, the Commission drafted this regulatory subsection to reconcile the disclosure and divestiture requirements to apply to all cannabis establishment licensees.  Some new language was added to implement the RICA requirement that individuals be allowed to invest in multiple licensed entities in accordance with provisions in the RICA and the Medical Marijuana Act. 

§ 1.3.3, Variance Requests for Changes in Approved Applications, Licensed Premises, Activities, Ownership and Control – This subsection was built off the existing variance requirements from DBR’s compassion center and cultivator licensing sections (see 230-RICR-80-05-1, §§ 1.2(I) and 1.3(H)). These provisions govern the process by which licensees are required to get pre-approval from the Commission prior to making significant changes to their submitted applications, company makeup, or physical premises.  Language from the existing regulation was streamlined to clarify the existing practice that these provisions apply from the point of application though full licensure, applying to applicants, provisional licenses and licensees. Based on new social equity provisions in the RICA, language was added to prohibit any proposed changes to the ownership structure of an approved social equity applicant status holder within the first year of licensed activities, using language that tracks existing language currently applicable to cannabis establishments.  This language was added to eliminate/reduce the likelihood of exploitation of approved social equity applicants which has been noted in other states with social equity programs.  

§ 1.3.4 Geographic Zones – The DBR regulation originally established six (6) application zones in its 2020 amendments to 230-RICR-80-05-1 (see § 1.15). Those zones were adopted by the legislature in RICA, R.I. Gen. Laws § 21-28.11-10.3. These zones will apply to all new retail licenses issued pursuant to §§ 1.4, 1.5, and 1.6. This brief section references the statutory zones and added provisions to those from DBR’s Regulation explaining what happens if an applicant is selected in more than one zone. To prevent applicants from submitting multiple applications and unfairly stacking the odds of a randomized selection process by applying multiple times for the 24 available retail licenses, a person or entity cannot be an interest holder with respect to more than one applicant/ application per zone irrespective of license type.  This language tracks language in the current DBR regulation, 230-RICR-80-05-1, § 1.2(C)(2)—which applies to compassion center applicants— and applies it to all retail license types, so that an applicant may only submit one application per zone and that a person or entity cannot be an interest holder with respect to more than one applicant/application.

§ 1.3.5, Commercial Cannabis Establishment Identification Cards – This subsection is based on DBR’s existing regulatory language in 230-RICR-80-05 1, § 1.4, related to registry identification cards with some improvements for clarity and efficiency. First, the Commission changed the name of the identification cards associated with commercial cannabis establishments to clearly distinguish commercial cardholders from the registry identification cards held by patients, registered caregivers and approved purchasers who are subject to the Medical Marijuana Program. This section applies to all commercial cannabis establishment license types set forth in this regulation and is consistent with RICA and applicable amendments to the to the Medical Marijuana Act.  This section also adds a new requirement that individuals who are strictly investors who are not onsite at the licensed cannabis establish premises at least five or more times a year do not need to hold a commercial card, which is a cost savings of $100 per card for an estimated savings of $300 to $600 per year, per cannabis establishment.    

§ 1.3.6, Criminal Background Checks – This content was in and tracks the registry identification card section of DBR’s original medical regulation, 230-RICR-80-05-1, § 1.4(C). This subsection applies to all commercial license types and reconciles the different requirements in RICA and the Medical Marijuana Act. The subsection provides a roadmap to the various statutory requirements for each license type as well as for caregiver background checks, and includes a list of presumptively disqualifying crimes that the Commission has determined to be substantially related to holding a commercial cannabis establishment license, namely: the conviction of or pleading guilty or nolo contendere to any felony charge or crime of (including conspiracy and/or attempt to commit) an act constituting a crime of forgery, embezzlement, obtaining money under false pretenses, misappropriation, bribery, larceny, extortion, fraud, false dealing, conspiracy to defraud, obstruction of justice, perjury, false swearing, or any other similar offense, adjudicated in a court of competent jurisdiction of this state, any other state, and/or of the federal government. It also incorporates references to the Fair Chance Licensing Act requirements, R.I. Gen. Laws § 28-5.1-14. Language in this section also tracks the RICA statutory requirement that licensees have a continuing duty to truthfully and fully disclose any subsequent criminal convictions to the Commission, thereby replacing the biennial background check requirement in the DBR regulation with a 10-day notification requirement, an annual attestation at the time of renewal, and the authority of the Commission to require a licensee to secure an additional background check as may be needed.

§1.4, Cannabis Retail Sales Application, Licensing and Renewals – In accordance with R.I. Gen. Laws § 21-28.11-10.2, this section establishes application requirements for cannabis retailers, setting forth an application fee and application selection process. The Commission incorporated many of the original procedural requirements from DBR’s regulation that were in place for the awarding and issuance of compassion center and cultivator licenses. Language from the DBR regulation was further streamlined and modified to meet RICA statutory requirements and to create a more efficient application process based on past applications cycles conducted by DBR. New language identifies the 12 new licenses established by the RICA, sets a $7,500 license application fee, and sets forth other licensing requirements, including the statutory license fee.

§ 1.5, Social Equity Retail License Application, Licensing and Renewals – In accordance with R.I. Gen. Laws § 21-28.11-31, this section establishes application requirements for social equity cannabis retailers.  The regulatory language incorporates many of the requirements for the application process set forth in the preceding § 1.4, establishes an application fee and application selection process, thereby modifying and adopting many of the procedural requirements from DBR’s regulation that were in place for the awarding and issuance of compassion center and cultivator licenses. The Commission has waived the application fee for the initial six (6) social equity licenses to be issued and will phase in the annual license fee in a measured way to allow social equity retail licensees to establish and operate their new businesses, in accordance with R.I. Gen. Laws § 21-28.11-31. This section includes a slightly longer time period allowance for a chosen social equity provisional licensee to get their cannabis establishment established and operational, and contains a requirement that social equity licensees maintain social equity applicant status to guard against the type of exploitation of social equity applicants that has been identified in other states.

§ 1.6, Licensed Workers’ Cooperative Cannabis Retail Sales Application, Licensing and Renewals – In accordance with R.I. Gen. Laws § 21-28.11-10.2, this section establishes application requirements for the new license type of workers’ cooperative cannabis retailers, set forth an application selection process, thereby adopting many of the procedural requirements from DBR’s regulation that were in place for the awarding and issuance of compassion center and cultivator licenses. As in other retail license application sections, application process language from the original DBR regulation was streamlined and modified to create a more efficient application process based on past retail application cycles conducted by DBR.  This section sets forth an application fee of $7,500, which is the same for the other new retail license types, and creates the requirement that any approved licensee maintain compliance with the Workers’ Cooperative Act, R.I. Gen. Laws Chapter 7-6.2 as a condition of licensing.    

§ 1.7, Cannabis Product Manufacturer Application, Licensing and Renewals – In accordance with R.I. Gen. Laws § 21-28.11-9 this section establishes application requirements for the new license type of a cannabis product manufacturer.  This section sets an application and license fee that was decided upon based on industry research and comparison to the cultivation license type.  The regulatory language of this section is modeled after the requirements applicable to licensed cannabis cultivators, and incorporates statutory requirements from the Cannabis Act that are applicable to this license type.  

§ 1.8, Compassion Center Application, Licensing and Renewals – This section is based on DBR’s existing provisions related to the application, licensing and renewal provisions applicable to licensed compassion centers (see 230-RICR-80-05-1, § 1.2). The language was modified to create a more efficient and streamlined process, based on past DBR licensing periods, and incorporates requirements set forth in the Cannabis Act. No changes to the status quo. 

§ 1.9, Hybrid Cannabis Retailer Authorization Application and Renewals – This section implements statutory requirements in the Cannabis Act that allow Compassion Centers to apply for and acquire an additional authorization to conduct adult use cannabis sales in addition to retail sales of medical marijuana.  This regulation incorporates the current application process of OCR. While R.I. Gen. Law § 21-28.11-10 established a fee for the hybrid authorization during the transition period, the statute authorizes the Commission to establish rules and regulations for the hybrid authorization, including the fee. The Commission has set the annual hybrid authorization fee at $30,000, which is the same as the statutory fee set in § 21-28.11-10.2 for all new cannabis retailers. No changes to the status quo apart from the fee reduction. 

§ 1.10, Cannabis Cultivator Application, Licensing and Renewals – This section is based on DBR’s existing regulation related to the application, licensing and renewal provisions applicable to licensed cannabis cultivators (see 230-RICR-80-05-1, § 1.3).  The new regulatory language is split into sections, thereby distinguishing between the different types of cultivator licenses created by the Cannabis Act and incorporates the statutory requirements of the Act as set forth below.

§ 1.10.1, Medical Marijuana Cultivators – The regulatory language in the original DBR regulation was streamlined to distinguish those requirements applicable only to medical marijuana cultivators.  The proposed regulatory language reflects a 10% reduction in current annual license fees, and also reflects the limiting of cultivator license classes to Micro, Class A and Class B, doing away with the larger C and D license classes that were not currently held by any existing licensee.

§ 1.10.2, Hybrid Cannabis Cultivators – The proposed regulatory language sets forth the procedural requirements for hybrid cannabis cultivators, who are existing medical marijuana cultivator licensees who have applied for the required authorization to cultivate cannabis for adult use purposes.  The requirements for this license type, which come directly from the Medical Marijuana Act and Cannabis Act, are streamlined and explained in this section.  A notable addition to the regulatory language is the statutory requirement that cannabis grows be measured by “canopy” going forward instead of the use of facility size, and provides guidance on such transition.  

§ 1.10.3, Annual Licensing Fees for Hybrid Cannabis Cultivators and Adult Use Cannabis Cultivators – The proposed regulatory language sets forth the licensing fees for hybrid and adult use cannabis cultivators, which reflects a 10% reduction in current annual licensing fees.  This section also reflects the limiting of license classes to Micro, Class A and Class B, doing away with the larger C and D license classes that were not currently held by any existing licensee, which comports with the Cannabis Act requirement that future cannabis licenses not exceed a 10,000 sq. ft. canopy.

§ 1.10.4, Licensed Cannabis Cultivator Application Process and General Requirements – The proposed regulatory language in this subsection tracks existing language in the DBR regulations, with modifications made to streamline the process based on past licensing periods conducted by OCR. The section describes the licensing application process for post-statutory moratorium application periods for adult use cultivators, and sets an application fee at $4,500, which is 10% less than the current application fee in the existing DBR regulations.   

§ 1.10.5, Renewal of Cultivator Licenses – General Requirements for Medical Marijuana Cultivators, Hybrid Cannabis Cultivators, and Adult Use Cannabis Cultivators – The proposed regulatory language in this subsection tracks existing language in the DBR regulations, with modifications made to streamline the process based on past licensing periods conducted by OCR.  Aside from synthesizing information for clarity and ease of understanding, no change to the status quo.

§ 1.10.6, Cooperative Cultivations – This section sets forth the statutory requirement in R.I. Gen. Laws § 21-28.6-14(d) that cooperative cultivations be phased out under DBR and that the Commission will not be accepting applications for or renewing this license type.

§ 1.11, Social Equity Applicant Certification – This section contains new regulatory language setting forth the application process for those individuals seeking to become certified as approved social equity applicants.  The regulatory language details the application and application review process, which tracks the statutory requirements of the Cannabis Act and incorporates policy decisions of the Commission, which were largely based on extensive research conducted on other state’s similar programs and processes.  This section does not set a fee for the application process to become certified as an approved social equity applicant, based on the Commission’s decision to waive the fee.  

§ 1.12, Social Equity Assistance Program and Fund – This section reflects new regulatory language governing the Social Equity Assistance Program and Fund, based on mandates found in the Cannabis Act, specifically § 21-28.11-31.  The proposed regulatory language creates a process whereby applicants, including approved social equity applicants, may request resources from the Program and Fund for the specific purposes set forth in the Cannabis Act.  This section details the application, application review process, and disbursement of resources processes chosen by the Commission under the authority granted to it under the Cannabis Act, and sets forth a streamlined process, including program requirements, to guide any resource applicant.   

§ 1.13, Cannabis Testing Laboratories – This section sets forth new regulatory language reiterating the requirement that cannabis establishment licensees are required to comply with RIDOH’s regulations governing cannabis testing, 216-RICR-60-05-6, that the Commission specifically adopts RIDOH’s testing regulations, and further specifies that the Commission may enforce violations of those regulations committed by cannabis establishments licensees licensed by the Commission.  

§ 1.14, Fees – This section includes a quick reference table of all fees contained in this regulation. 

Public Comment will be received in person ONLY.  Anyone wishing to view the livestream of this regulation hearing, can join the zoom meeting here:

https://us02web.zoom.us/j/81856432668?pwd=vEyYedhbKhLKBjtF5Eh0niWMaSimBI.1 

Note: All public comments received on any Commission regulation are considered public records and will not be redacted. If you do not want your personal information to become public, do not include that information with your public comment.