With the passing of legislation to legalize adult-use cannabis in Rhode Island in May 2022, we are entering a period where the use of cannabis will become more mainstream and demand will grow.
As such, Rhode Island is issuing cannabis cultivator licenses to growers who want to make a business of cultivating cannabis and who pass meet the stringent requirements in the state to do so.
Cannabis cultivation is a specialist area that requires extensive expertise and investment. The cultivator license process recognizes this and places high demands on business owners before and after being awarded a license.
A cultivator license will allow you to grow cannabis commercially but it will be heavily regulated and the eyes of the authorities will be on your business from the start.
With our experience in helping cannabis cultivators around the U.S. become established and grow their businesses, we are ideally positioned to help you take the first step to achieve your dreams by securing one of the prized licenses.
Classes of cultivator license in Rhode Island
The Office of Cannabis Regulation has administered cannabis licenses since medical cannabis was first legalized in Rhode Island in 2006. Medical cannabis growers, manufacturers and retailers have been subject to stringent requirements.
For adult-use cultivation, there are set to be four different classes of cultivator licenses under the new legislation, based on the proposed size of the cannabis production area of businesses. This includes the areas for cultivating, storing, processing, packaging and/or manufacturing cannabis and the total area will be verified by an officer.
The breakdown of licenses is as follows:
Micro-license: 2,500 sq. ft. (Annual fee of $5,000)
Class A: 5000 sq. ft. (Annual fee of $20,000)
Class B: 5,001 – 10,000 sq. ft. (Annual fee of $35,000)
Class C: 10,001 – 15,000 sq. ft. (Annual fee of $50,000)
Class D: 15,001 – 20,000 sq. ft. (Annual fee of $80,000)
Facilities over 20,000 sq. ft. must contact the Office of Cannabis Regulation before applying for a license.
Initially, only micro-license, Class A, and Class B applications will be accepted by the licensing office and cultivators will only be licensed at a single location. Plans to operate larger facilities in the future should be detailed in the license application.
Cultivator license application process
All categories of cultivator applications must be accompanied by a non-refundable application fee of $5,000.
As well as the basic details of who you are and what your business is proposing, you need to include the following type of information:
Certificate of incorporation/organization or certificate of authority to transact business in Rhode Island, articles of incorporation/organization, bylaws or operating agreement and corporation organization chart.
Details about the proposed physical location of the growing/storing/producing facility including total square footage. Alternatively, a description of the general location(s) where it may be sited, if approved, and the expected schedule for purchasing or leasing the location(s).
Evidence that the location complies with all local zoning laws.
A business plan, including the scope of activities, budget and resource narratives, and the timeline for initiating operations.
The legal name, current address, and date of birth of each officer/director or member/manager of the applicant.
Policies and procedures for handling voluntary and mandatory recalls of cannabis products and separating outdated, damaged, deteriorated, mislabeled, or contaminated medical marijuana.
As you can see, cannabis cultivator license applications require a lot of documentation and are complex. But the paperwork doesn’t stop there…
Cultivator license: post-approval process and timeline
Upon notification of approval of a cannabis cultivator license application, the approved applicant must “take reasonable and documented efforts to complete the prerequisites for issuance of the license”.
These steps are likely to include:
Payment of the annual licensing fee.
Providing a sufficient description of the final physical location of the cultivator premises.
Evidence of complete compliance of the facility with the local zoning laws.
Evidence that the physical location for the cultivator premises is not located within one thousand feet (1,000’) of the property line of a preexisting public or private school (if the evidence is not already provided).
A current Certificate of Occupancy (or an equivalent document) to demonstrate compliance of the cultivator facility with the relevant safety and building codes.
Evidence of either ownership of the property or agreement by the owner of the property to allow the operation of a licensed cultivator on the property.
A final diagram of the facility, including where marijuana will be cultivated, stored, processed, packaged, and manufactured, and where security alarms and cameras and surveillance recording storage will be located.
The legal name, current address, and date of birth of any person who will be an employee or agent of the cultivator at its inception.
You have a maximum of nine months to provide the licensing office with the required information or you face the risk of losing the license approval.
Once the license has been issued, the licensed cultivator must take reasonable and documented efforts to launch licensed cultivator activities (cultivation, processing, packaging, manufacturing, and/or other activities) within six months.
How can our Rhode Island cannabis attorney help you with a cultivator license?
If you want to grow adult-use cannabis in Rhode Island, trying to set your business up without the right legal advice can cause unnecessary delays, expenses, and legal issues. The disconnect in legality between state and federal law complicates cannabis business matters.
Even the license application process can seem laborious. It is also competitive, with only a limited number available. Our attorneys provide the knowledge and support that you need to plan, incorporate and grow your cannabis business — starting with your application for a Rhode Island cannabis cultivator license.
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