During the debate over legalizing recreational cannabis, progressives fought hard to reserve a portion of the lucrative market for communities they argued were disproportionately harmed by prohibition. Following several other states, lawmakers created the so-called “social equity” licenses in the Rhode Island Cannabis Act.
But even before the R.I. Cannabis Control Commission has finalized regulations it previously vowed to complete by the end of the year, the social equity provisions may have provided a legal opening for some to argue that the state’s law is unconstitutional.
That’s what happened in May when a California attorney sued the commission and its chairperson, Kimberly Ahern, in federal court, challenging the social equity provisions and the requirement that each cannabis retailer with a social equity license be at least 51% owned by Rhode Island residents.
Plaintiff Justyna Jensen is the wife of Jeffrey Jensen, the Beverly Hills attorney and cannabis business stakeholder who has filed suit in several other states challenging cannabis social equity and residency statutes. Justyna Jensen has said she intends to apply for a retail cannabis license.
The Jensens are now seeking a preliminary injunction against the issuance of dispensary licenses in Rhode Island, arguing the law violates both the so-called Dormant Commerce Clause prohibiting discrimination against residents from other states, and the Equal Protection Clause protecting against discrimination based on factors such as race and religion. Both clauses are in the U.S. Constitution.
The Jensens and their Providence-based attorney Albin Moser did not respond to a request for comment. The Cannabis Control Commission also did not immediately comment.
Michael J. Yelnosky, a professor at Roger Williams University School of Law, says the Jensen case hinges more directly on whether the judge finds the Rhode Island Cannabis Act runs afoul of the Dormant Commerce Clause.
Because the law doesn’t specifically mention race as a factor in determining social equity applicants, instead resting on income, ZIP code, poverty rates and criminal records, it’s like previous pieces of legislation meant to tackle historic injustice, such as the Civil Rights Act of 1964, he says.
But Yelnosky says the state’s prohibition against ownership exceeding 50% may be resting on more questionable footing, which is why after the Jensens’ lawsuit halted the issuance of licenses for weeks in New York, that state’s attorney general ended up settling out of court.
The agreement in New York provided the Jensens with a dispensary license.
“They have had some success,” said Yelonsky, who points to the ongoing legal challenge against Rhode Island’s commercial truck tolling plan, which a federal court in 2022 found was in violation of the Commerce Clause.
According to legal filings, the state is arguing the clause – found in Article 1 of the U.S. Constitution – doesn’t apply to its recreational cannabis sector “because it talks about regulating real and legal markets,” Yelnosky said.
Further complicating matters is the 1st U.S. Circuit Court of Appeals ruling that a Maine medical marijuana law disfavoring out-of-state applicants had violated the Commerce Clause.
Yelnosky said the state is “trying to limit that case” from being applied because it centered on the medical market.
“The courts haven’t said anything about recreational,” he said. “And Congress doesn’t have an opinion. But I don’t think that matters. The majority [in the Northeast] said explicitly that whether it’s legal or illegal, it’s still a market. And you can’t interfere with that market by regulating to exclude non-residents from participation. So it’s a solid argument. Particularly given the precedent. The third rail is continuing to tell out-of-state residents you cannot participate in this market.”
Yelnosky says the state’s chances on the Equal Protection Clause front are much higher.
“It’s not a good argument [by the plaintiff] because they haven’t applied and been denied. And you only grant a preliminary injunction if the plaintiffs show they are likely to win and will suffer some irreparable harm without it,” he said.
But while the lawsuit snakes its way through the judiciary, proponents of applying social equity to the licensing regime aren’t finished. They want to strengthen the legislation in a way that better targets those harmed by prohibition, which could make it more vulnerable to future court challenges.
State Rep. Leonela Felix, D-Pawtucket, is confident the cannabis commission’s regulations will split the difference between equity and legality. She plans to co-sponsor legislation creating a special fund for the licensing fees that currently go to the state’s general fund.
And Felix isn’t concerned about a licensing delay.
“The General Assembly was explicit about the disproportionate harm caused during the war on drugs. It shows our intent,” she said. “Letting [the cannabis commission] take their sweet time is going to be helpful in the long run.”
The Cannabis Advisory Board in September presented a draft of its social equity recommendations, asking the commission “in accordance with current constitutional, federal and Rhode Island laws” to use race and ethnicity “as an additional factor and/or consideration to be evaluated when certifying applicants as social equity applicants.”
The commission took up those recommendations at its Oct. 4 meeting but did not finalize them.
Brian Hodge, spokesperson for the R.I. Office of the Attorney General, says both a motion for an injunction by the plaintiff and a motion to dismiss by the state are pending and no hearings have been scheduled.
But Yelnosky says that even if the lawsuit is dismissed outright, it would be far from the end of the Jensens or other would-be cannabis entrepreneurs from raising a legal stink.
“I don’t think it’s going away,” he said. “In a case like this, it’s not a question of ‘whether’ but ‘when.’ They will just wait until the regulations are issued. So, the clock is just starting to tick.”
