Like multiple other states around the U.S., Rhode Island is set to allow both recreational and medical use of cannabis, opening up lucrative opportunities for business owners.
With the industry set to thrive here in the coming years, the business opportunities for cannabis entrepreneurs are clear. However, adult-use cannabis is certain to be a tightly regulated industry, creating some challenges for business owners looking to take advantage of the law changes and set up in the state.
To enter the cannabis industry here, you must be prepared to apply for a cannabis business license and abide by the maze of local and state regulations. Violations can lead to administrative penalties or even criminal investigations.
The Rhode Island cannabis attorneys at Cannabis Law Solutions have followed the evolution of legalization here closely and have a comprehensive understanding of the various laws. We can help you capitalize on the opportunities for growers/producers, manufacturers, retailers, and other sectors of the industry as they develop.
Regulating Cannabis in Rhode Island
When the Rhode Island governor signed legislation in May 2022, it made the state the 19th in the nation to legalize and regulate recreational cannabis.
The Rhode Island Cannabis Act took many years to formulate but now legalizes and regulates recreational adult-use cannabis in the state, with a strong emphasis on public health and public safety.
The Act sets out the guidelines for the industry, aiming to make it equitable, controlled, and safe. It also includes a provision for the automatic expungement of prior civil or criminal cannabis possession charges by July 2024.
Individuals aged 21 or older can now possess and grow cannabis. Adults can sell and possess up to one ounce (28 grams) of cannabis with no more than 10 ounces (283 grams) for personal use kept at home. Residents can also grow a small amount at home. In-store sales will be legal by the end of 2022 in Rhode Island.
The Act also makes provisions for an equitable, accessible cannabis retail market by setting aside a proportion of application fee/new license revenues for social equity applicants and worker-owned cooperatives.
Current fees charged to patients and caregivers for registration in the state’s medical cannabis program will also be eliminated under the new legislation.
Overseeing the rollout of these new cannabis regulations and the cannabis industry as a whole in Rhode Island will be a three-member Cannabis Control Commission. This will be appointed by the governor with input from the House speaker and approval from the Senate.
How many cannabis retailers will be allowed in Rhode Island?
Under the Rhode Island Cannabis Act, 33 cannabis retailers will initially be allowed in Rhode Island.
The tax rate for cannabis businesses has been set at 20 percent, with the following breakdown:
7 percent sales tax
10 percent state cannabis tax, and
3 percent tax by the municipality where the marijuana is sold
Timeline for Rhode Island cannabis business licensing
With adult-use sales scheduled to start in December 2022, there’s no time to lose with your cannabis business license application if you want to be part of this exciting industry.
Medical cannabis cultivators will be able to start even earlier, with the cultivation and manufacture of adult-use cannabis legal from August 1, 2022.
Medical cannabis dispensaries (“compassion centers”) in Rhode Island will have the option to convert to a hybrid license and begin adult-use sales in December.
Only a limited number of licenses are available during the initial roll-out. The earlier you apply, the more chance you will have of securing one of them.
Types of Rhode Island cannabis business licenses
Rhode Island will initially issue five types of adult-use cannabis business licenses, as follows:
Product manufacturer (or Processor)
Hybrid retailer (medical and adult-use cannabis)
This licensing system is simpler than in many other states. Note that each license permits only certain types of business activities in the cannabis sector so speak to one of our Rhode Island cannabis attorneys before getting started on your application.
What’s needed to apply for a cannabis business license in Rhode Island?
The eligibility requirements to apply for a cannabis business license in Rhode Island are as follows:
All owners must be over the age of 21
All owners must be free of disqualifying convictions
Rhode Island residency is not currently stipulated as a requirement for eligibility.
The final application instructions are still to be determined but the Rhode Island Cannabis Act makes it clear that to obtain a cannabis business license, you will need to submit at least the following documentation as part of your application:
Your operating plan
An inventory tracking plan
A financial plan
Local municipal approval
The exact documentation can be discussed with one of our Rhode Island cannabis attorneys…
Cannabis business legal planning, advice, and support in Rhode Island
Whether you want to grow, manufacture, or retail cannabis in Rhode Island, getting set up without the right legal advice is asking for trouble.
The eyes of the entire state are on you as the cannabis industry evolves here so it’s important to do everything by the book or the legal hurdles could be substantial.
Our Rhode Island cannabis attorneys can provide the knowledge and support you need to plan, incorporate, protect, and grow a successful cannabis business.
For informed legal advice, call 866-329-0729 for a consultation with a knowledgeable cannabis attorney at Cannabis Law Solutions.
How will our cannabis and psychedelic business services help you
Cannabis & psychedelics business entity formation
Whether you are looking to form a limited liability company (LLC) or a corporation, our experienced business lawyers can discuss the pros and cons of both and help you incorporate your business with the optimal structure to achieve your goals.
Cannabis & psychedelics business licenses
If you want to run a cannabis or psychedelics business, you will need a valid business license issued by your state authority as well as local permits. Eligibility criteria are likely to be stringent and we can help you navigate the often-complex license application process.
Cannabis & psychedelics corporate documentation
Whether you need to prepare for a license application, transfer of business ownership, change of corporate structure, transfer business location or another business process, we can help you identify and draft the documentation you need to operate legally in your state.
Cannabis & psychedelics administrative law
State authorities watch licensed and unlicensed cannabis and psychedelics businesses closely. If you violate regulations, you could face an administrative penalty. Our attorneys can provide representation or help you prepare for an administrative hearing, settlement conference or appeal.
Cannabis & psychedelics disputes and litigation
Whether you have a dispute with another business, a legal issue with one of your partners or a licensing or administrative issue, you may need legal assistance to help resolve it. We are adept at alternative dispute resolution methods as well as civil litigation.
Cannabis & psychedelics regulatory compliance
As the cannabis and psychedelics industries emerge in states around the U.S., they are more heavily regulated than most other industries. We can help your business navigate the red tape and plan to stay on the right side of the regulatory authorities in whichever state you are based.
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Opening a successful and legal marijuana dispensary begins with hiring a knowledgeable cannabis attorney and learning all that you can about this industry and the applicable laws. The next step is to set up a corporate business structure and create a retail business plan, which an attorney can also help you with. You will also need to research potential locations for your business to find out where licensing is legal.
Next, obtain the necessary licensing to operate your cannabis business and ensure that your operational infrastructure follows all laws and regulations. If you are not growing or producing your products yourself, you will need to contract with cultivators and product manufacturers to supply your business.
Before you begin the process of applying for a cannabis license, you need to establish a business from which to apply. The state will not consider an application from an individual; instead, the applicant must be a business entity in good standing with the state.
Your business will begin when you choose a legal entity and file the appropriate paperwork with the Secretary of State. After that, you will file with the IRS and obtain a taxpayer identification number.
You would start with articles of incorporation and include other key corporate provisions in the bylaws that state how your company will be governed. If your business is a partnership or limited liability company, you will need an operating agreement. Depending on your line of business, you may also need other licenses to operate.
In addition, you will also need other corporate documents that the Department of Health will want to see when they are considering your cannabis application. Of importance here, your application would ask you to provide:
Your articles of incorporation
Certificate of good standing
An attorney can help you both choose the appropriate business entity and draft and file any necessary documentation. When you are seeking to enter the cannabis field, it is important to get your business formation process right to make the best possible impression on the Department of Health. Doing so will allow you to devote as much time as possible to your cannabis-related business arrangements.
As a precursor to even being able to apply for state approval of your cannabis business, you must have a properly formed business entity. As a result, the first documentation you must file is the documentation establishing your business.
Next, you will need to obtain a tax identification number by registering with the IRS. In addition, the licensing application also asks you to provide your current state business license registration.
Beyond your general business licenses, you would also need specific permission to operate a cannabis business. This involves a very strict registration process where the state will closely scrutinize your application. You can expect the state to review each of the licenses that they request since it wants to be sure that your business complies with laws before they are granted the right to operate in the cannabis industry.
Compliance means making sure that you follow the myriad of laws that apply to your state’s cannabis businesses. Further, the regulatory landscape is fast-changing as the state gains more experience overseeing the businesses.
What this means for you is that knowledge is one of the most important things that you can have. Not only do you need an expert in the current laws, but you also need to be able to anticipate future changes in the law. This means that each business needs an expert who understands the laws and can advise them as to the best means of following them.
Also, compliance also means that you have sound policies and procedures in place that govern your business. The Department of Health is already looking at your policies when they evaluate your initial application. However, they reserve the right to audit and inspect your business to verify that you are complying with the law. You should always be ready for an inspection by documenting how you are following the regulations.
The best way to show compliance is by keeping your paperwork organized and conducting your own internal audits. The Department is interested primarily in your safety procedures, so you should be ready to show how you are following your own procedures. Further, you should always reevaluate your own policies to see if there are any weaknesses or changes that can be made to strengthen them.
The major thing that the Department of Health is interested in is the safety of both the product and the operation. As a baseline, the state wants to know who all of the owners are and the people who will be working in the operation.
While there are common documents among all the application classes that the Department is seeking, there are also special requirements for each of the categories.
For example, when the Department is evaluating a manufacturing application, it will pay close attention to measures that your business takes to ensure proper hygiene and testing methods. The Department also will pay attention to the manufacturer’s procurement practice and the security of its inventory.
With regard to laboratory submissions, the focus is partially on the testing processes and equipment that the business will use. The Department wants technical, scientific details of the exact tests and the quality control that the laboratory will use for testing. The emphasis is on ensuring product safety.
For courier businesses, the Department will scrutinize the safety and security of the delivery process, including the vehicles and the delivery routes that are used. The emphasis is on the safety of qualified patients, primary caregivers, and courier staff in light of the product being delivered. In addition, since there is interaction with patients, the Department wants to see how the applicant plans on protecting patient privacy.
Cannabis legalization often works in a series of steps. Broadly speaking, cannabis policy reform occurs in the following stages:
Prohibition: Criminal penalties apply for the possession or use of cannabis.
Decriminalization: Low-level criminal penalties are removed for cannabis usage (e.g., personal possession) and criminal penalties may be replaced with civil fines.
Medical legalization: Full medical legalization with commercial licensing and testing may come straight away or in a series of stages.
Legalization: State laws are changed to make any cannabis activity a crime no longer. Cannabis must be removed from the Controlled Substances Act and new rules added for the legal commercial cultivation, distribution, testing, and sales of cannabis.
Oregon and Colorado states have decriminalized the use, sale, and possession of psilocybin, which is the active ingredient in “magic mushrooms” and has been shown to have great value in treating certain medical conditions, like depression, anxiety and life-threatening cancers.
Besides these states, the cities of Oakland and Santa Cruz in California as well as Washington, D.C., Somerville, Cambridge and Northampton (Massachusetts) have all decriminalized psilocybin.
It should be noted that all psychedelics are illegal in the United States under federal law and drugs like MDMA, DMT, ketamine, LSD and psilocybin are Schedule 1 controlled substances. This means they are viewed as having no medical purpose and no legitimate commercial application