This week Governor Daniel J. McKee signed the Rhode Island Cannabis Act, and with that Rhode Island is now the 19th state to legalize the recreational adult-use of cannabis and existing medical dispensaries will be able to start selling recreational cannabis as early as December. Those medical dispensaries will need to pay a conversion fee of $125,000 if they want to sell recreationally, and it is believed that most, if not all, will do so. The Act allows adults to possess up to 1 ounce of cannabis flower and up to 5 grams of cannabis concentrate. Like other states, the Act also allows for home cultivation of up to three cannabis plants. The Act also establishes a 20% sales tax for cannabis products broken down to a retail excise tax of 10% as well as a 3% local sales tax, on top of the existing state sales tax of 7%.
The Rhode Island Cannabis Act requires the governor to appoint a three-person cannabis commission which will oversee and regulate the new industry. The commission will issue 24 new dispensary licenses divvied out evenly among six geographic regions. Local municipalities can opt out of allowing cannabis retailers with voter approval via ballot referendums, but they cannot opt out if they currently have medical cannabis compassion centers operating in their jurisdiction. They can also set their own rules on public consumption through ordinances. Gov. McKee said that the Act “ensures that legalization is equitable, controlled and safe,” and in an effort to ensure social equity is achieved, one dispensary license per region must go to a social equity applicant. The Act has additional social equity initiatives in the forms of technical assistance, grants and automatic expungement of cannabis convictions. The Act also calls for the creation of a “social equity assistance fund” that will be financed by initial licensing fees of $30,000. The $125,000 conversion fees from the medical dispensaries will also be deposited into the social equity assistance fund.
The social equity definition is eerily similar to that used by Illinois. Social equity applicants will need to meet one of several criteria to qualify, including at least 51 percent ownership by people who have resided in a disproportionately impacted area for five of the past 10 years, 51 percent ownership by people who have faced arrests or convictions over offenses that would qualify for expungements under the law or having income that does not exceed 400 percent of the median income in a disproportionately impacted area for five of the past 10 years. A business that has at least 10 employees, with at least 51 percent residing in disproportionally impacted areas or who have been arrested or convicted for an expungable offense under the bill will also qualify as would being able to demonstrate significant experience in types of businesses that promote economic development. Not surprisingly, the signing of the Act was applauded by NORML with executive director Erik Altieri stating that “the approval of legalization in Rhode Island is just the latest sign that the overwhelming majority of Americans want marijuana to be legalized and that their lawmakers are becoming more responsive to this growing public sentiment.”
We won’t be surprised if we see state number 20 added to the list of legalized recreational cannabis this year, but for now congratulations and best of luck to those looking to operate in Rhode Island. If you have any questions or would like to contact the authors, please email David Standa (david.standa@gmlaw.com ).
By: David Standa
About Greenspoon Marder Greenspoon Marder LLP is a full-service law firm with over 225 attorneys and more than 20 office locations across the United States. With operations from Miami to New York and from Denver to Los Angeles, our firm attracts some of the nation’s top talent in key markets and innovation hubs. Our core practice areas include Real Estate, Litigation, and Transactional Services, complemented by the capabilities of a full-service firm. Greenspoon Marder has maintained a spot on The American Lawyer’s Am Law 200 as one of the top law firms in the U.S. since 2015, and our goal is to provide exceptional client service by developing a thorough understanding of each client’s business needs and objectives in order to provide strategic, cost-effective solutions.
MEDIA CONTACT
Natalie Villanueva, Director of Marketingnatalie.villanueva@gmlaw.com
This Greenspoon Marder LLP Client Alert is issued for informational purposes only and is not intended to be construed or used as general legal advice nor a solicitation of any type. Please contact the author(s) or your Greenspoon Marder LLP contact if you have any questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer’s legal qualifications and experience.
