Rhode Island taking applications for six more medical cannabis dispensaries
Published July 17, 2020
Rhode Island medical cannabis regulators started accepting applications Friday for six potentially lucrative dispensary licenses, a move that will triple the number of retail outlets for the $60 million-plus market.
With only three dispensaries now licensed, the state ranks at the top of the U.S. in terms of patients per dispensary, according to the recently released Marijuana Business Factbook – despite Rhode Island having only roughly 18,000 patients.
But the new licensees, unlike the three existing vertically integrated dispensaries, will not be allowed to grow their own marijuana, according to the Providence Journal.
The six new dispensaries, called compassion centers, will have to procure their product from the 56 stand-alone cultivators in the state as of the second quarter.
That situation could change once the dispensaries are operational, however, because “the regulations include the possibility of seeking a variance to grow,” the Journal reported.
The licenses will be issued through a lottery process, with one permit issued for each of six geographic zones.
State regulators plan to take their time, however.
The application deadline isn’t until Dec. 15 because regulators want to give time for applicants to select locations and for local governments to hold public hearings, according to the Journal.
Winning licensees aren’t expected to start selling medical marijuana until late 2021.
The licensing plan spurred a power battle between Gov. Gina Raimondo and legislative leaders who objected to the state’s plan for retail-only dispensaries. Raimondo has won – for now.
And the stand-alone cultivators argued that additional vertically integrated dispensaries could drive them out of business.
Rhode Island medical cannabis regulators started accepting applications Friday for six potentially lucrative dispensary licenses.
R.I. opens application window for 6 new medical-marijuana dispensaries
The state Department of Business Regulation will begin accepting applications Friday from businesses hoping to win a license to operate one of six additional medical marijuana dispensaries.
But it likely won’t be until the end of next year at the earliest before any of the applicants who eventually win one of the lucrative licenses — chosen through a lottery — is selling marijuana, DBR officials say.
The DBR released regulations in March for how those new dispensaries must operate, with the expectation of opening the application period soon thereafter.
But the same week the new rules were made public — after a months-long power struggle between the governor and legislative leaders over who had final say over those regulations — the coronavirus struck.
The application period will be open through until Dec. 15.
The DBR wanted to give applicants ample time to select a location for their proposed dispensary, if they don’t have a location now, as well as give local governments time to hold public hearings on any proposal, said DBR Director Elizabeth Tanner and Pamela J. Toro, the department’s chief of legal services.
The DBR hasn’t set a date for the lottery, though officials have discussed how it might run with colleagues from the Rhode Island Lottery, said Toro.
“We’re going to have more information about the process once we have the chance to access the volume [of applicants],” Toro said on Thursday. “Maybe the beginning of the year.”
Many of the 55 or so state-licensed cultivators who now grow medicinal marijuana for the three existing dispensaries have their eye on winning one of the licenses, said Antonio Barone, treasurer of the Rhode Island Cannabis Association, a group of about 15 growers and related businesses.
“The most important part of all this, however, is the [improved] accessibility for the patients,” Barone said, whose own Warwick cultivation business, IDBP, Inc., will apply for a license. “We still have some patients on fixed incomes who have to drive 30 or 45 minutes to get their medicine. That doesn’t happen with regular pharmacies that are on just about every corner.”
The current three dispensaries — the Thomas C. Slater Compassion Center, in Providence; the Greenleaf Compassion Center, in Portsmouth; and the Summit Medical Compassion Center, in Warwick — currently serve about 20,000 licensed patients, including out-of-state patients.
The regulations call for a new dispensary in six regions around the state. Three of those regions already host an existing dispensary. Thus those regions could eventually have two.
Unlike the current dispensaries, the new ones will be prohibited from growing their own marijuana, though the regulations include the possibility of seeking a variance to grow once their retail stores are open.
To apply, applicants will have to submit a $10,000 fee along with a host of detailed financial information, including how much operating capital they have, who their investors are and how much debt the applicant is carrying.
They will have to have a location that wins local zoning approval and meets required setbacks from schools and other restrictions.
They will have to provide a timeline for initiating operation, a three-year projected income estimate, identify how many workers they will hire and present a marketing and promotional plan, including a “pricing strategy.”
Once DBR has reviewed all the applications it will invite “all qualified applicants” to participate in the public lottery drawing.
Representatives for each applicant must attend the lottery, which may be as basic as picking numbers out of a twirling drum, or look like the lottery’s daily numbers drawing.
Applicants can apply for a license in multiple zones but will be allowed to operate a dispensary in only one zone. If an applicant is chosen for more than one zone, it will have to choose which zone it wants most and DBR will hold another lottery for the other spot(s).
Winners of the licenses will each have to pay an annual $500,000 licensing fee, considered one of the — if not the — most expensive in the country.
A power struggle broke out late last year when legislative leaders objected to Gov. Gina Raimondo’s DBR proposing that the new dispensaries be retail centers only and be boxed into designated regions.
House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio called Raimondo’s restrictions a “blatant overreach” of her power and beyond what the General Assembly wanted when it approved creation of the new dispensaries.
Not allowing the new dispensaries to grow gave an unfair advantage to the three existing dispensaries, the leaders argued.
Their objections and talk of changing the regulations during the budget process prompted Raimondo to file a lawsuit alleging the legislators, who make laws, were violating her powers to write regulations to administer those laws.
The lawmakers eventually backed down, though they signaled they might push through new laws this session that more closely reflect their wishes. That has not come to pass yet in this year’s Covid-disrupted legislative session.
Many of the 55 or so state-licensed cultivators who now grow medical marijuana for the three existing dispensaries…