The last few years have been a struggle for Karen Ballou, owner of CultivatingRI LLC.
She’s been waiting for state regulators to assemble the framework for Rhode Island’s still-nascent cannabis industry and start issuing two dozen retail licenses since the legal sales of recreational cannabis began in late 2022.
Right now, Ballou and about 60 other cultivators grow plants and harvest buds to sell to the state’s seven dispensaries, but with few places to sell to – combined with sagging marijuana prices and lukewarm demand – she sometimes finds it challenging to cover expenses, from utilities to plant nutrients.
And Ballou holds little faith that state officials will improve the situation any time soon.
The plan has long been to have up to 33 licensed dispensaries across the state, but Ballou is now skeptical that Rhode Island will ever see that many.
“We’ve had adult use for three and a half years, and still, we don’t have any new stores operating,” she said.
Others in the industry acknowledge that the market dynamics are working against Rhode Island as it moves closer to taking its long-awaited step of issuing more licenses.
The state is years behind Massachusetts, which opened its first retail cannabis store in 2018 and has 1,384 licensed establishments of all sorts across the Bay State as of May 1, including 38 licensed retailers in Bristol County, Mass., alone.
Massachusetts’ market saturation has led to oversupply, driving marijuana prices down. Those effects have spilled across the border, with many Rhode Islanders crossing into Massachusetts to take advantage of lower prices and greater accessibility.
Many say Rhode Island’s slow and safe approach to setting up the cannabis regulations hasn’t helped. Regulators still haven’t publicly revealed a date when retail licenses will be issued.
With such forces at play, it raises questions: How much demand will there be for Rhode Island’s retail cannabis licenses when they’re finally made available? And will there be enough business to go around for those who do obtain a new license?
The R.I. Cannabis Office says it expects up to 1,000 entities to apply when the licensing process begins, based on comparisons with what’s happened in other states and Rhode Island’s previous experience with medical cannabis licenses.
But while paying hefty fees for a license to sell marijuana legally once seemed like a surefire investment years ago, things may not be so certain now.
In Portsmouth, Greenleaf Compassionate Care Center Inc. – one of the first medical marijuana dispensaries in Rhode Island – was placed into receivership last year and has been up for sale while it continues to operate.
Nicholas J. Hemond, the lawyer who hase been appointed Greenleaf’s receiver, says the dispensary’s financial issues are more the result of entanglements related to the divorce proceedings of one of the principals than market forces.
But he acknowledges that the value of the nonprofit entity – which had a $10 million purchase offer in 2019 that fell through – isn’t what it once was. Hemond says a new buyer recently agreed to buy Greenleaf for $5.5 million, pending court and regulatory approvals.
Meanwhile, two entities that won cannabis licenses by lottery in the fall of 2021 – and each paid a $500,000 license fee – have failed to open because legal issues surrounding site selection led to them missing deadlines to meet state requirements, including securing certificates of occupancy.
Green Wave CC Inc., which had planned to open a dispensary in Foster, was still seeking an extension as of January, but R.M.I. Compassion Center Inc. has withdrawn its plans for a dispensary in Woonsocket.
Now Ballou is irked by what she says was a missed opportunity to immediately hold another lottery to give the R.M.I. license to another entity. Instead, the R.I. Cannabis Control Commission took no action on the open license during a meeting in May.
“They are trying to slow roll the process, and we don’t know why,” Ballou said.
FALLING BACK
There is no denying that regulators have been deliberate in setting up the framework for the cannabis industry.
But Benjamin L. Rackliffe, a partner at the law firm Pannone Lopes Devereaux & O’Gara LLC who deals with cannabis law, attributes the delays not so much to the Cannabis Control Commission but rather to elected officials who missed critical deadlines, noting that it took Gov. Daniel J. McKee over a year to appoint the panel, despite the law stipulating a mere 40 days.
Nevertheless, Rackliffe takes a more patient perspective on the evolving cannabis market. Having represented cultivators during the initial medical licensing phase in 2017, he is now assisting a dozen would-be dispensaries that are eagerly awaiting their opportunity to apply for the retail licenses.
“The delay in the process was long before the CCC was put in place,” Rackliffe said. “We might as well just get it right and have the best-regulated industry that is economically stable.”
Rackliffe says the current market imbalance between cultivators and dispensaries is rooted in regulations established years ago when the state permitted only three dispensaries to distribute medical cannabis.
“There was a loophole that allowed licensed caregivers to grow cannabis and sell it to patients while also sharing any surplus with dispensaries,” he said, a loophole that fostered a cottage industry that quickly turned profitable.
But while Massachusetts has rapidly advanced its recreational market, Rackliffe acknowledges Rhode Island has fallen further behind.
The competition has been fierce along the border, resulting in a stagnant retail sector and a loss of revenue and jobs to establishments across state lines. He notes that there are three dispensaries within a few miles of his Barrington home, all of which are in nearby Massachusetts, with several more in Fall River.
While there were 1,649 jobs in Rhode Island with connections to the marijuana sector in 2024, according to an analysis by cannabis staffing platform Vangst, the industry in the Bay State employed more than 27,000.
[caption id="attachment_498254" align="aligncenter" width="1024"]
UP FOR THE CHALLENGE: Joseph Pakuris, CEO of dispensary Mother Earth Wellness Inc. in Pawtucket, says he welcomes the competition that will come when the state issues more retail cannabis licenses.
PBN FILE PHOTO/MICHAEL SALERNO[/caption]
MAKING THE RULES
Industry analysts initially projected $220 million in annual retail sales in Rhode Island, but the state’s seven dispensaries haven’t come close to hitting that mark yet.
Data collected by the R.I. Department of Business Regulation shows recreational and medical marijuana sales reached a combined $107.7 million in 2023 and climbed to $118.3 million in 2024. But there are signs that sales have leveled off. In the first five months of 2025, the dispensaries recorded $48.5 million in sales, a decrease from $48.9 million in the same period of 2024.
Still, the office expects recreational sales to swell by fiscal 2027 to $206 million, spurred by additional licenses being available.
There’s a lot of state and local tax revenue riding on the industry.
On retail cannabis sales, state law imposes a 10% excise tax and 7% sales tax, plus a 3% local tax for the municipality where the sales took place. The most recently available monthly R.I. Department of Revenue report of local cannabis sales tax collections shows operators collected $2.8 million on the 3% tax through April 2024.
In April, the CCC approved final regulations that will facilitate the awarding of 24 new retail recreational licenses, with half earmarked for social equity initiatives and worker-owned cooperatives.
However, the timeline for when this lottery will occur remains unclear. In April, all CCC Chairman Kimberly Ahern would commit to is that it would happen “this calendar year, perhaps even faster.”
As of June 16, the cannabis office said it would make announcements in the coming weeks.
There will be four licenses available in each of six geographic zones across the state, issued under a hybrid selection model that includes an initial screening process followed by a randomized lottery.
Applicants will have to pay a $7,500 fee and, if awarded, $30,000 a year for annual licenses. However, the first six social equity licenses the state awards will have both the initial application fee, as well as the annual $30,000 retail license fee waived for the first year but must pay $7,500 to reestablish the retail license in the second year, $15,000 in year three, $22,000 in year four and $30,000 in year five and every subsequent year.
R.I. Cannabis Office Administrator Michelle Reddish says the office seeks to finish writing the rules of the social equity application process by the end of June, a top priority among advocates who viewed legalization as a way to right historic wrongs perpetrated during the 1980s-era “War on Drugs.”
Since the transfer in May of oversight responsibilities to the R.I. Cannabis Office from the Office of Cannabis Regulation, previously housed within the DBR, the new agency’s staffing needs “continue to evolve,” Reddish said.
The office is actively recruiting to fill three new positions, in addition to the 23 full-time employees who were transferred from DBR.
Reddish says the agency believes there is strong interest in expanding Rhode Island’s cannabis retail landscape.
Regulators are now in a phase of licensing “structured to increase access” across the six geographic regions of the state “while prioritizing social equity and supporting worker-cooperative models,” she said.
“That said, the market will ultimately dictate how many licenses are issued,” she said. “Our role is to create a thoughtful and strategic framework that responds to demand while promoting access, fairness and long-term sustainability.”
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CULTIVATING BUSINESS: Magnus Thorsson, a Johnson & Wales University professor, runs a cannabis entrepreneurship program at the university, where students learn growing techniques on tomato plants. Thorsson has also created a new cannabis brand geared toward wellness.
PBN PHOTO/
MICHAEL SALERNO[/caption]
MISSED OPPORTUNITY?
Magnus Thorsson, a professor and co-founder of Johnson & Wales University’s Cannabis Entrepreneurship Program, argues that Rhode Island’s licensing approach is too restrictive and has become an obstacle to maximizing revenue, favoring a select few “vertically integrated” businesses that can both grow and sell a product.
As a result, the focus has on been on selling high-potency cannabis, not innovating the types of products that might provide a competitive advantage over what’s being offered in Massachusetts.
“There are 65 crayons in the crayon box, but we are only coloring with one or two,” he said. “We should be coloring with all of them.”
Thorsson recently launched his own cannabis product – a six-pack of low-THC pre-rolled joints aimed at relieving menstrual pain – in partnership with cultivator Bonsai Buds LLC in Cranston and hemp farm Lovewell Farms LLC in Hopkinton.
With five of the seven Rhode Island dispensaries vertically integrated, “they may not have any motivation to broaden or test things out,” he said. “And there is so little consumer education. Consumers don’t know what to ask for.”
Thorsson likens Rhode Island’s cannabis industry to the alcohol industry immediately after Prohibition ended in 1933.
“We had hard liquor. There was no wine or craft beer,” he said. “The cannabis industry needs to move toward that evolution or continue to miss the opportunity.”
So far, Thorsson says, Rhode Island has somewhat ignored the boom in wellness-based cannabis, which is growing between 20% to 30% every year, while some studies show that the high-potency subsector is stagnant or even in decline.
Thorsson says his research shows that in fiscal 2023, Massachusetts generated approximately $284 million in cannabis tax revenue, or $40 per capita, while Rhode Island reaped roughly $10 million, less than $10 per capita.
While Thorsson is unsure whether Rhode Island has enough demand for cannabis products to support another 24 dispensaries, each additional location will be an improvement.
“I just don’t know if 24 is the magic number,” he said.
NOT SO EASY
Nicholas Hemond, the Greenleaf receiver, doesn’t believe more licenses will help and may further destabilize the Rhode Island market and cause prices and tax revenue to fall.
“I don’t see the need for more centers,” said Hemond, a partner at DarrowEverett LLP who does legal work for Massachusetts-based Solar Cannabis Co., which has a nonprofit dispensary in Warwick. He’s also a member of the board of the nonprofit Solar, a role for which he is unpaid.
But the potential market risk isn’t stopping people from wanting to jump in. Since he was appointed as receiver for Greenleaf last November, Hemond says, he has been contacted by between 10 and 12 people interested in purchasing the business; four of them were multistate operations.
He also heard from some who saw it as a get-rich-quick opportunity, which may have been true early on. “Some people still think it’s a path to the promised land,” Hemond said. “It’s not.”
In 2023, before Hemond took over, Greenleaf had filed a federal lawsuit challenging the labor provision of the state’s recreational marijuana law requiring retailers to enter into “peace agreements” with their workers, allowing them to unionize in exchange for not picketing or stopping work. Greenleaf, which argued the requirement deprived employers of their bargaining power, dropped the case last September.
And when Hemond stepped in to oversee the dispensary, one of his first decisions was to cut prices. The previous ownership had kept prices elevated to give the impression it was a premium cannabis. “They were just selling an overpriced product,” Hemond said.
Now Hemond has reached an agreement to sell Greenleaf for $5.5 million to a group led by Rhode Island native Octavius Prince, an entrepreneur and film producer who has a stake in the local cultivator Ocean State Controlled Botanicals LLC, which must be approved by the CCC and the courts.
In the meantime, Hemond continues to hear from people interested in vying for one of the retail licenses, some more serious than others. For those who attempt to enter the market, he says, one of the first questions that needs to be asked: “How do you compete with Massachusetts?”
A BIG BET
Joseph Pakuris, co-owner of the dispensary Mother Earth Wellness Inc. in Pawtucket, uses his location on the edge of Interstate 95 to his advantage. Multiple signs tout Mother Earth and its drive-through to motorists headed north into Massachusetts.
Pakuris suggests that while there is, indeed, a need for more dispensaries, an excessive number might overwhelm the market, leading to potential oversaturation.
Nevertheless, Pakuris welcomes new competitors into his home city, saying he has established a strong brand identity. “I’m confident my customer base will remain loyal,” he said.
But as the state braces for a potential influx of license applications, cultivators such as Jason Calderon, CEO of Bonsai Buds, say the growers have been fighting a losing battle.
That’s because price trumps product quality for many consumers right now. And Massachusetts dispensaries are difficult to beat on that front, with prices for one-eighth of an ounce of marijuana ranging from $13 to $14, compared to $20-$25 in Rhode Island.
Many of those holding cultivator licenses are not actually providing Rhode Island dispensaries with the product, those involved in the industry say, seemingly waiting on the sidelines until more retail licenses are issued.
Ballou doesn’t have the ability to put things on hold.
She funneled her life savings into CultivatingRI – which she established in 2017 – with the hope of building the cultivation business into something her children can inherit. She has no choice but to stay all in.
“Most of us bet the farm on the farm,” she said.
