The Rhode Island Cannabis Act: New Laws for Recreational Users, Retailers, and Manufacturers

On May 25, 2022, the Rhode Island Legislature enacted the Rhode Island Cannabis Act to legalize and regulate the recreational use of cannabis. The sale of cannabis by licensed retailers may begin on December 1, 2022. The Act imposes restrictions on the personal use of cannabis and penalties for individual violations. It also imposes taxes on the commercial sale of cannabis and establishes general licensing and regulatory requirements for those along the supply chain, including retailers. The Act establishes three regulatory bodies:

1. The Rhode Island Cannabis Control Commission an independent panel of three commissioners appointed by the governor to oversee the regulation, licensing, and control of cannabis within the state.
2. The Cannabis Advisory Board, which will work in collaboration with the Cannabis Control Commission to advise and issue recommendations on the use, commerce, regulation, and effects of cannabis within the state.
3. The Office of Cannabis Regulation, which will advise and assist the Cannabis Control Commission in carrying out all its functions, powers, and duties.

Personal and Home Use
Under the Act, individuals 21 years of age or older may legally:

1. Purchase up to one ounce of cannabis at a time (or the equivalent of one ounce of cannabis concentrate) from a licensed retailer.
2. Possess up to ten ounces per resident inside their primary residence.
3. Give away or “gift” up to one ounce of cannabis without remuneration to another person aged 21 years or older.
4. Possess cannabis-related accessories.

Accordingly, those previously convicted of a felony or misdemeanor related to the possession or use of cannabis are entitled to expungement of the decriminalized offenses upon written request. Adults 21 years of age or older can grow cannabis in their primary residence. Still, they may not possess more than three “mature” plants and three “immature” plants at a time, regardless of how many persons reside on the premises. In addition, the use and cultivation of cannabis in one’s home is subject to specific security requirements mandated by the Rhode Island Cannabis Control Commission.

Penalties
An individual possessing more than two ounces of cannabis outside their primary residence, or more than 10 ounces within their primary residence, may be charged with a misdemeanor. In addition, possession of twenty-five or more live marijuana plants may subject an individual to a felony charge. The Act, however, makes it a mere civil offense for an individual 21 years or older to possess between one and two ounces of marijuana outside of their primary residence, or for an individual between 17 and 20 years of age to have any amount under two ounces. Furthermore, any person who operates a retail business selling cannabis without a license or registration required by the Act may be prosecuted under the Uniform Controlled Substances Act or other applicable law. Therefore, retailers must be careful to affix the appropriate stamps, labels, or other indicia on cannabis products to avoid criminal penalties.

Taxes
The Act imposes three different taxes on the sale of cannabis: a sales tax (which is currently 7%), a state cannabis excise tax (10%), and a local cannabis excise tax (3%). In total, users can expect to pay approximately 20% of the retail purchase price of cannabis in combined taxes. However, the state and local cannabis excise taxes will not apply to the sale of cannabis or cannabis products by a medical marijuana treatment center to a primary caregiver, qualifying patient, cardholder, compassion center cardholder, or authorized purchaser.

Licensed Cannabis Cultivators
Cannabis cultivators, often referred to as “growers,” are defined by the Act as entities licensed to “cultivate, process, and package cannabis” to deliver to other cannabis establishments but not to consumers. Under the Act, cultivators that were properly licensed on or before May 25, 2022, may continue using their license once the Act goes into effect. Still, the Act places a moratorium on issuing new cannabis cultivator licenses until two years following the final issuance of the Cannabis Control Commission’s rules and regulations. Beginning on August 1, 2022, and upon an additional licensing fee payment, any properly licensed medical marijuana cultivator may act as a “hybrid” cultivator and produce cannabis for adult and medical use.

Hybrid Cannabis Retailers
Rhode Island “compassion centers” that currently dispense medical marijuana may, upon payment of a $125,000 hybrid cannabis retailer fee, sell adult-use cannabis for a period of one year. However, they must make good faith efforts to ensure the sale of cannabis for adult use has no significant adverse effect on their current medical marijuana programs and/or patient needs. The centers must also: (1) be in good standing with the Office of Cannabis Regulation; and (2) post a copy of a certificate of authorization evidencing a license in good standing and payment of the hybrid cannabis retailer fee in a conspicuous place on their premises.

Cannabis Product Manufacturer
Cannabis product manufacturers typically act as the “middleman” between cultivators and retailers. A properly licensed cannabis product manufacturer may purchase cannabis from cultivators to sell to other licensed entities. To obtain a cannabis product manufacturer’s license, the applicant must:

1. Be at least 21 years of age and a legal resident of the state.
2. Undergo a criminal background check.
3. Pay a non-refundable application fee, and an annual license fee.
4. Prove the applicant is current and in compliance with all obligations for filings and payments for taxes with the division of taxation.

Social Equity Program
Beyond regulations, the Act also aims to remedy the long-standing repercussions of prior cannabis laws. In an attempt to reduce barriers to ownership and participation in the cannabis industry for individuals and communities most adversely impacted by previous cannabis-related laws, the Act establishes a social equity program endowed by a corresponding social equity fund. The program will offer business assistance and license application benefits, among other things, to those most directly and adversely impacted by such laws.

Surrounding States
Adult-use cannabis is legal in all New England states except for New Hampshire. Cannabis laws in states immediately surrounding Rhode Island are similar: in Massachusetts, adults 21 years of age and older may possess up to one ounce of marijuana outside of the home, up to ten ounces inside the house, and up to six cannabis plants (or twelve for two or more adults) in the home for personal use. In addition, Connecticut residents may possess up to one-and-a-half ounces outside the house, up to five ounces inside the home or in a locked glove box or trunk, and up to three “mature” and three “immature” plants at home, capped at twelve per household.

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