PROVIDENCE — Ever since Rhode Island legalized recreational marijuana more than two years ago, the question for hopeful cannabis shop owners has been: how can I get a license?
Unlike Massachusetts, the number of recreational retailers in Rhode Island will be capped, at 24 new retail licenses (not including the existing medical dispensaries, which can also sell recreational cannabis.)
Since the number of applicants will undoubtedly exceed 24, the debate for several years has revolved around whether the licenses should be given out based on merit, or a random selection process.
Rhode Island used a random lottery in 2021, after the state expanded the number of medical marijuana dispensaries from three to nine, seeking to avoid any appearance of political favoritism in issuing the lucrative licenses. But some in the industry have argued they should have been issued based on merit.
The new Rhode Island Cannabis Control Commission wants to do a hybrid of both. An initial proposal approved by the three-member panel on Friday called for applications to first be screened based on merit, with qualifications such as “ability and readiness for licensure,” according to a presentation on the proposal.
Once the applicant pool has been whittled down based on merit, the cannabis board voted to hold a random drawing, assuming the number of remaining applicants exceeds the number allowed in each geographic zone. Friday’s vote authorized staff to draft formal regulations, which will require another vote.
The 2022 legalization law requires the cannabis retail licenses to be spread throughout six geographic zones, with a maximum of four stores per zone. Of the four, at least one license has to be reserved for a “social equity” applicant and one has to be a worker co-operative.
A random lottery will help avoid “favoritism, outside influence, inside advantage, bias and corruption,” according to the proposal. (Former Governor Gina Raimondo had specifically cited the case of Jasiel Correia, the ex-Fall River mayor convicted of extorting bribes for marijuana licenses, in her decision to hold a random lottery back in 2021.)
The 2021 medical marijuana lottery, which was open to the public, used actual Rhode Island lottery balls pulled by a blindfolded retired FBI agent wearing short sleeves.
Mariana Ormonde, the chief legal counsel for the cannabis commission, said merit-based processes in other states have led to legal challenges. She said rejected stores could challenge the state’s scoring system, claiming an unfair rubric or bias in the decision. Lawsuits could delay the entire timeline for getting stores open, she noted.
“If you take one thing away from my feelings about this, it is to avoid further delay for the industry,” said Kimberly Ahern, the chair of the commission. “It is what I have heard over, and over, and over again.”
The process of getting recreational cannabis sales up and running has been slow. It took Governor Dan McKee a year to appoint the three members of the cannabis commission, which has since been discussing a long list of rules and regulations that were not spelled out in the 2022 legalization law. Figuring out how to license the new shops is one of the biggest decisions the commission has to make.
The lack of new stores doesn’t mean there’s no recreational pot yet. As a bridge measure, existing medical dispensaries were allowed to start selling recreational cannabis on Dec. 1, 2022. The stores, which are mostly located in industrial areas, have sold a combined $54 million in recreational sales so far this year, and about $15 million in medical sales, according to state data.
Prospective store owners and worker co-ops have been anxious to get in on the industry, and cities such as Providence have been exploring allowing cannabis stores in commercial districts where they could exist side-by-side with coffee shops, clothing boutiques, and restaurants.
Ahern said she expects there to be a lot more interest in getting a recreational retail license compared to the most recent medical marijuana expansion, where there were 45 applicants for six new licenses. That’s because the licensing fee for dispensaries was $500,000, while the fee for new stores will be $30,000, a significantly lower barrier to entry. (Cannabis business do not have the same access to start-up loans as other types of businesses because of federal prohibition.)
Ahern said the commission should seek to improve upon the random lottery process from 2021, where some of the applicants who were selected ended up not getting zoning approvals from the town or city where they were located, causing significant delays.
The commission is aiming to get the regulations finalized by the end of the year.
Steph Machado can be reached at steph.machado@globe.com. Follow her @StephMachado.
Should cannabis retailers be selected based on merit, or through a random drawing? State officials are aiming to do both. Read More
