Last fall, the Rhode Island Cannabis Control Commission opened applications for cannabis retail licenses for the first time since the state’s legalization of recreational marijuana use in 2022 — which is still illegal at the federal level. The state received 97 applicants for up to 24 new dispensary licenses, which were set to be selected through a lottery in May.
But around two weeks ago, R.I. Federal District Court Judge Melissa DuBose issued a preliminary injunction against the license distribution process, prohibiting the CCC from processing applications or holding a lottery. The basis of the litigation — which includes three lawsuits by out-of-state marijuana retailers — is the residency requirement in Rhode Island’s 2022 Cannabis Act.
Last Tuesday, the CCC filed an appeal against the preliminary injunction.
The residency requirements mandate that an applicant for a license must either be a R.I. resident or be applying with a business where over half of the equity is owned by a R.I. resident. The act also includes a $7,500 application fee for prospective marijuana shop owners, as well as a secured physical location.
The out-of-state retailer plaintiffs argued that the residency requirement violates two constitutional provisions: the dormant commerce clause — an implied restriction, based on the commerce clause, on states’ ability to pass laws that could regulate interstate commerce — and the equal protection clause.
CCC Chief of Public Affairs Charon Rose wrote in an email to The Herald that the residency requirement is “part of a broader effort to prioritize participation by (R.I.) residents and to advance the state’s local economic development goals.”
“Knowing the Act was facing legal challenges in this Court, the CCC continued forward with its plan to implement the Act and its licensing scheme,” DuBose wrote in the preliminary injunction. “The resulting fall-out will be, to be blunt, self-inflicted.”
DuBose had previously dismissed two lawsuits that contested the residency requirements in the act. But when the U.S. Court of Appeals in Boston renewed the case late last year, the higher court ordered Dubose to decide on the case at least 45 days before the CCC awarded the licenses.
Cannabis retail license applicant Asher Schofield — who also owns Frog and Toad, a store in Providence — told The Herald that he wishes that Rhode Island took inspiration from the “plenty of existing precedent” in other states administering such licenses.
“It’s very frustrating that we’ve seen such incredible delays,” said Schofield, who said he began his licensing process in 2022 with the goal of opening a cannabis co-op — a dispensary in which workers own the store and share in the profits. The 2022 Cannabis Act had designated six of the possible retail licenses to these stores.
If Schofield receives a license, he said, his store will demonstrate that the cannabis business “does not necessarily need to be owned by several corporations” and can instead be “worker-owned and operated in a way that really benefits the working class people.”
As of now, “the market is in the hands of just a few very vertically-integrated businesses.” That model does not “encourage “a diversity of business viewpoints and business models,” he added.
Laila Posner is a senior staff writer covering business and development.
