Disclosure Requirements Regarding Public Company Interest Holders in Marijuana Establishment Licensees
230-RICR-80-05-3 INACTIVE RULE
3.1 Authority
This Part is promulgated in accordance with R.I. Gen. Laws § 21-28.6-1 et seq.
3.2 Purpose
The purpose of this Part is to supplement and update the Rules and Regulations Related to the Medical Marijuana Program Administered by the Office of Cannabis Regulation at the Department of Business Regulation, Part 1 of this Subchapter, to accommodate the economic development of Rhode Island's cannabis industry.
3.3 Definitions
A. In addition to the terms defined in R.I. Gen. Laws § 21-28.6-3 and § 1.1.1 of this Subchapter, for this Part the following terms shall have the corresponding meanings:
1. "Public company" means a corporate entity that is listed and whose ownership is comprised of shares of stock which are traded on a major stock exchange registered with the Securities and Exchange Commission or comparable foreign securities regulator.
3.4 Disclosure Requirements Regarding Public Company Interest Holders
A. As to a public company that is an Interest Holder with respect to a marijuana establishment applicant or licensee, the applicant/licensee can satisfy the application and continuing disclosure requirements as to such public company interest holder by disclosing:
1. All directors and officers of such public company;
2. All public company officers, employees and agents who will have direct managerial or operational control with respect to the marijuana establishment; and
3. With respect to public company shareholders, all persons and/or entities that hold shares in the public company in an amount equal to or greater than the minimum ownership disclosure threshold required by the stock exchange(s) on which the public company is listed and its shares are traded;
B. The divestiture requirements as to financial interests and/or control that a public company interest holder has with respect to a marijuana establishment licensee shall be based upon the interest holder disclosures made by the marijuana establishment applicant/licensee in compliance with this Part.
C. With respect to a public company interest holder, registry identification cards and national criminal background checks will be required for those persons identified in § 3.4(A)(2) of this Part.
3.5 Severability
If any section, term, or provision of this Regulation is adjudged invalid for any reason, all remaining sections, terms, and provisions shall remain in full force and effect.
| Title | 230 | Department of Business Regulation (includes the Office of the Health Insurance Commissioner) |
| Chapter | 80 | Marijuana |
| Subchapter | 05 | Medical Marijuana |
| Part | 3 | Disclosure Requirements Regarding Public Company Interest Holders in Marijuana Establishment Licensees |
| Type of Filing | Adoption |
| Regulation Status | Inactive |
| Effective | 06/03/2021 to 01/04/2022 |
Regulation Authority:
R.I. Gen. Laws § 21-28.6-2, 21-28.6-4, 21-28.6-5, 21-28.6-6, 21-28.6-12, 21-28.6-14, 21-28.6-15, and 21-28.6-16.
Purpose and Reason:
The proposed new regulation will accommodate and support Rhode Island’s developing cannabis industry by articulating reasonable disclosure standards for a type of interest holder not initially contemplated in the current Regulations, 230-RICR-80-05-1. Within the current Regulations, all interest holders in a marijuana licensee must be disclosed down to the individual person level. This includes persons that hold low-level shareholder interests in a corporate entity that holds an interest in a marijuana licensee. All such persons must obtain a background check and be disclosed to the Department. As Rhode Island marijuana licensees expand their businesses, publicly traded corporations may seek to invest in and/or provide management services to the State’s licensees. However, disclosure of every shareholder of a publicly traded corporation is arduous and ultimately futile because shares trade daily and the list of shareholders is perpetually changing. Therefore, this new regulation adds disclosure standards for publicly traded corporation interest holders, which mirror the disclosure requirements of the stock exchanges on which the corporations are listed and/or applicable securities regulators. This is achieved by requiring disclosure of those shareholders who have an interest in the publicly traded corporation over a defined threshold, which is typically those shareholders with interests of five percent (5%) or greater.
