Rhode Island Cannabis Advocates List Four Key Changes for Next Year’s Legalization Law

Let’s puff, puff, pass the bills.

By Christopher Shea, Rhode Island Current

Against a backdrop adorned with infused beverages, exquisite charcuterie platters, and the harmonious melodies of Drake permeating the venue, an illustrious assembly consisting of more than three dozen industry advocates, leaders, and legislators convened earlier this month to solemnize the first anniversary of the inaugural legal cannabis transaction in the state of Rhode Island.

The revelry that transpired on December 1st, within the confines of an event venue in Cranston’s Rolfe Square, transcended mere merriment. Instead, it evolved into a compelling and purposeful forum, meticulously designed to discuss the modifications and augmentations sought for the forthcoming year. Chief among the subjects under scrutiny was the imperative of fostering equitable and inclusive participation by all Rhode Islanders in the burgeoning cannabis industry.

Distinguished Representative David Morales, an unwavering figure within the Democratic Party hailing from Providence, skillfully articulated the gravity of delving into the intricacies of legislative adjustments, underscoring the pivotal significance of meticulous attention to detail. Representative Morales was among the triumvirate of Democratic legislators who graced the occasion with their presence. Two other esteemed representatives added their voices to the discourse, albeit through video communication: Enrique Sanchez of Providence and Leonela Felix of Pawtucket.

Since the inception of this legislative journey back in April, champions of the cannabis cause have diligently traversed the labyrinthine passages of Rhode Island’s comprehensive 115-page legislative framework, ardently endeavoring to identify and rectify any perceived loopholes that could potentially engender an uneven and inequitable playing field within the state’s cannabis landscape. Against this intricate backdrop, the celebratory gathering on Friday was a suitable platform for presenting four meticulously crafted proposals. Notably, two of these propositions necessitate the consensus of the General Assembly and the governor, while the remaining two fall within the purview of the Cannabis Control Commission.

The first proposal revolves around revising and expanding the eligibility criteria for prospective social equity applicants, ensuring a broader and more diverse cohort of individuals can partake in the opportunities presented by the burgeoning cannabis industry. The second proposal calls for the augmentation of the social equity fund through the allocation of tax revenues, a strategic measure designed to fortify and enhance the support systems available to those historically disadvantaged by the prohibitive strictures of cannabis.

Furthermore, the advocates have proffered a proposition for activating fee waivers, alleviating the financial burden of aspiring entrepreneurs striving to establish themselves within this burgeoning industry. Last but by no means least, the fourth proposal advocates for the implementation of provisional licenses, a mechanism that holds the potential to expedite the entry of qualified individuals into the realm of legalized cannabis commerce.

In summation, the commemorative celebration that unfurled on December 1st was not merely a fleeting moment of jubilation; instead, it manifested as an occasion marked by contemplation and unwavering determination. It bore witness to the convergence of a diverse and dedicated cadre of stakeholders, all united in their collective mission to propel Rhode Island’s cannabis industry toward a future of equity and prosperity. These proposals, born of meticulous contemplation and a genuine commitment to fairness, stand as a testament to the enduring resolve to nurture an inclusive and thriving cannabis ecosystem within the state.

Simplifying Social Equity Definitions in the Rhode Island Cannabis Industry

One of the central proposals currently under deliberation pertains to the meticulous refinement of the existing definition that delineates the core attributes of a “social equity applicant.” This intricate delineation has garnered the attention of Rhode Island’s Cannabis Control Commission. This entity commenced its operations in June and has set its sights on the refinement of this definition by the year 2024.

The framework of cannabis legislation in Rhode Island currently limits the total number of retail licenses that can be issued, capping it at 24. Within this allocation, a laudable portion of six grants is reserved for those identified as social equity applicants, while an additional six are exclusively designated for worker-owned cooperatives. The statutory framework governing social equity, however, encompasses a multitude of nuanced definitions, encompassing criteria that pertain to disproportionately impacted areas and ownership structures.

In elucidating the existing landscape, Representative Morales took it upon himself to inform the assemblage that, as the regulations presently stand, applicants are only mandated to ensure that a minimum of 51 percent of their workforce comprises individuals with a history of substance offenses or individuals residing in disproportionately impacted communities. Remarkably, the applicants are not obliged to meet this requirement personally. This particular aspect of the definition has raised concerns regarding the potential for exploitation, wherein individuals of substantial wealth originating from outside the state could ostensibly hire a predominantly marginalized workforce and claim the coveted status of a social equity applicant.

Representative Morales vehemently articulated his reservations about this 51 percent requirement, unequivocally asserting that such a provision would be deemed insufficient in achieving the intended social equity goals. To rectify this perceived loophole, he emphasized the need to delete this language from the existing legislative framework, thereby ensuring a more rigorous and stringent definition that upholds the principles of equity and fairness.

Furthermore, another facet of the legislation under scrutiny revolves around stipulating that applicants may qualify for a social equity license by demonstrating a track record of promoting “economic empowerment in disproportionately impacted areas.” This clause has come under the scrutiny of advocates who contend its language is susceptible to overly broad interpretations.

As an illustrative example, Blake Johnson, a legal practitioner affiliated with Green Path Legal, a female-led law firm based in Barrington specializing in cannabis-related matters, presented a noteworthy scenario. Under the current formulation, he posited that even an act of philanthropy, such as a substantial monetary donation by an individual of significant wealth, such as Jeff Bezos, to an entity like the Southside Cultural Center, could be construed as constituting economic impact. It is argued that such an interpretation could inadvertently undermine the intended rigor and precision of the social equity designation.

In light of these persuasive considerations, there emerges a clarion call for the meticulous scrutiny, refinement, and revision of these definitions, with the overarching aim of ensuring that the designation of a “social equity applicant” retains its robustness and meaning. This endeavor aligns with the broader objective of fostering equitable and inclusive participation within the burgeoning cannabis industry. The collective sentiment among advocates resonates with the metaphorical call to “puff, puff, pass the bills,” echoing the imperative need for judicious legislative action in this dynamic and evolving landscape.

Advocating for Cannabis Tax Revenue to Support Social Equity

In addition to the meticulous revision of the definitions of social equity applicants, there is a passionate advocacy for expanding the fund designed to provide crucial support to these individuals. A proposed legislative measure is being urged upon the General Assembly to materialize this vision. This proposed legislation specifically dictates that approximately fifty percent of the tax revenue generated from recreational cannabis sales should be directed towards augmenting the state’s fund, meticulously crafted to aid social equity applicants.

Zara Salmon, the visionary founder of the Providence-based plant-lifestyle brand known as CRAVEInfused, underscored the profound significance of this proposal. She conveyed, “We are advocating for an initial allocation of fifty percent of the tax revenue, with the understanding that negotiations may necessitate adjustments.” This substantial financial allocation is perceived as nothing short of essential in bolstering the emerging landscape of social equity within the cannabis industry.

It is noteworthy to observe that the trajectory of recreational cannabis sales in Rhode Island has exhibited a distinctive pattern. According to data meticulously sourced from the state’s Department of Business Regulation (DBR), the sales of recreational cannabis experienced a gradual ascent, with a notable turning point occurring during the spring season when it surpassed the sales figures of medical cannabis. To put this into context, the cumulative recreational cannabis sales from December 1, 2022, through October 30, 2023, have amounted to a substantial $62.9 million.

In correspondence received on Monday, DBR spokesperson Matthew Touchette revealed that the state’s Department of Revenue had projected $76 million in recreational cannabis sales by the culmination of the fiscal year on June 30, 2024. If these projections come to fruition, it is anticipated that this would translate into an estimated $13 million in state tax revenue, in addition to approximately $2.3 million designated for the local municipalities where dispensaries are situated. As of December, Rhode Island proudly boasts seven licensed recreational dispensaries: one in Central Falls, Exeter, Providence, Portsmouth, and Pawtucket, and two in Warwick.

Nonetheless, a matter of profound concern that necessitates immediate reform pertains to the financial underpinning of the state’s social equity fund. Intriguingly, this fund does not benefit from the tax revenue derived from cannabis sales but instead relies upon an initial $125,000 license fee and assorted fines that may be levied upon retailers. As of November 3, the fund had amassed $1,013,500 from these fees.

With great passion, Zara Salmon elucidated upon this discrepancy, underscoring the contradiction between the current financial standing of the fund and the imperative of robustly supporting social equity businesses. She stated, “This fund is intended to support six social equity businesses, yet the financial requirements to initiate a cannabis business typically range from $2 million to $3 million.” The stark disparity between the available funding and the actual capital requirements for launching a cannabis venture is a poignant reminder of the pressing need for a substantial infusion of capital into the social equity fund.

Furthermore, advocates resolutely champion the cause of expanding the social equity fund to encompass prospective dispensary owners. This expanded ambit would provide aspiring entrepreneurs with a crucial avenue for procuring the startup capital that is indispensable for navigating the intricacies of the demanding and capital-intensive cannabis industry. Given the federal prohibition on cannabis, most major financial institutions remain hesitant to extend loans to prospective dispensary owners. This predicament leaves cannabis entrepreneurs with a shortage of viable financing options, as poignantly highlighted by Eve Santana, the founder of High Beautiful. This lifestyle brand ardently advocates for the positive aspects of cannabis. Santana perceptively addressed the financial challenge facing the cannabis industry, emphasizing, “The cannabis sector confronts a complex funding quandary.” This is why we are appealing to the government for financial support.”

Notably, these legislative proposals have garnered the steadfast support of Representatives Felix, Morales, and Sanchez. Representative Morales disclosed to the assembled audience that legislative proceedings will be initiated in the House by mid-February. However, the determination of the lead sponsor is still pending, as communicated to Rhode Island Current. These endeavors are emblematic of the concerted and unwavering efforts to shape a cannabis industry in Rhode Island characterized by equity, inclusivity, and sustainability. The pivotal role that legislative action plays in realizing this vision is unmistakable and indispensable.

Mitigating the Financial Burden on Social Equity Applicants

In conjunction with the aforementioned proposals, an additional avenue of considerable significance has emerged to address the demanding financial burden social equity applicants face. This avenue pertains to eliminating licensing fees, which can prove to be exorbitantly expensive and serve as a substantial impediment for aspiring entrepreneurs seeking entry into the cannabis industry.

Within the existing regulatory framework delineated by the Rhode Island Cannabis Act, retail establishments aspiring to engage in the sale of adult-use recreational cannabis are mandated to remit a substantial initial fee of $125,000 to the Department of Business Regulation (DBR). This financial requirement is further compounded by the obligation to pay a licensing fee of $500,000 annually. It is imperative to acknowledge that these fees, given their magnitude, can present a formidable barrier for numerous prospective social equity business owners.

As astutely highlighted by Zara Salmon, in the event of the approval of a social equity license at the present moment, the business owner would not benefit from any exemptions or reductions in these significant fees. Consequently, the financial encumbrance remains exceptionally challenging to overcome, particularly for individuals and communities that have historically encountered formidable obstacles in their pursuit of participation within the cannabis industry.

In a concerted effort to foster equitable access and inclusivity within this burgeoning sector, advocates and legislators are actively exploring strategies to lessen the impact of these fees on social equity applicants. The overarching objective is to create a more equitable and level playing field wherein individuals from diverse backgrounds and communities are afforded a genuine and fair opportunity to participate and thrive within the dynamic realm of the cannabis industry.

Introducing Specialized License Categories for Equity Enhancement

Within the expansive array of proposals presented by cannabis advocates, a particularly noteworthy initiative has emerged. This initiative strongly urges the Cannabis Control Commission to establish distinct license categories meticulously designed to address the specific requirements and obstacles encountered by individuals residing in communities of color or those who have previously confronted legal ramifications associated with cannabis-related infractions.

This proposition’s core lies in the concept of “provisional licenses.” These specialized licenses are conceptualized as a pivotal mechanism strategically designed to bridge the gap and provide a more equitable and inclusive avenue for individuals aspiring to embark on a career in the cannabis industry. The foundational principle behind a provisional license revolves around the state’s ability to conduct comprehensive evaluations and assessments of a prospective business’s operational plan before formally issuing an official license.

This proposal is underpinned by a profound understanding of the unique obstacles and disparities encountered by aspiring entrepreneurs, particularly those originating from historically marginalized communities or bearing the weight of prior encounters with the criminal justice system linked to cannabis-related offenses. These impediments can manifest in various forms, encompassing challenges ranging from limited access to capital resources to the intricacies of navigating the complex regulatory framework governing the cannabis industry.

As aptly articulated by Blake Johnson, establishing provisional licenses serves an imperative purpose, offering individuals the valuable opportunity to meticulously align all the essential components and resources necessary for the successful launch and operation of their cannabis businesses. By facilitating provisional licenses, the state endeavors to create an enabling framework that empowers entrepreneurs to engage in thoughtful planning, meticulous preparation, and proactive resolution of potential challenges well before the formal commencement of their business activities.

In essence, the proposal for specialized provisional licenses stands as a testament to the unwavering commitment to redress the disparities and inequities that have historically marred the cannabis industry. It underscores an unwavering dedication to leveling the playing field and cultivating an environment where individuals from underrepresented and disadvantaged backgrounds are equipped with the essential tools and resources required to thrive in the burgeoning cannabis sector. This initiative exemplifies a steadfast pledge to ensure that the avenues to entrepreneurship are accessible and impartial for all, thus championing the noble ideals of fairness, inclusivity, and equity within this dynamic and evolving landscape.