The state of recreational cannabis in Rhode Island has been in a peculiar grey area for months, with regulations that will govern the multimillion-dollar sector now being drafted for an industry that for almost two years has been partially up and running.
Across the border in Massachusetts, cannabis regulators are facing their own turmoil. The chair of its commission was suspended in 2023 for allegedly making “culturally insensitive” remarks, the acting chair is out on pregnancy leave, and Inspector General Jeff Shapiro called the agency “rudderless,” recently asked Bay State lawmakers to put it into receivership.
The Rhode Island Cannabis Act, passed in May 2022, allowed for retail sales of marijuana at seven medical dispensaries and promised an eventual expansion through the issuance of 24 additional retail licenses. Those licenses have not been awarded yet by the R.I. Cannabis Control Commission, the agency overseeing the regulation of the nascent sector.
The situation in Massachusetts may be leading Rhode Island to move cautiously.
Matthew Touchette, the commission spokesperson, says the staff is working “diligently” to finalize the first set of regulations, which they expect to present “at future public meetings over the next two months.”
Asked how long it may take for additional cannabis retailers to be up and running, Touchette said, “We prefer not to speculate on this as the rules and regulations have not been promulgated.
“The market will dictate the need for licenses...and depend on how many applicants, including those for social equity, are submitted,” he said.
Meanwhile, the 60 licensed cannabis cultivators in Rhode Island are free to grow their products, but they are desperate for more retailers that can buy the product.
After investing substantial amounts of personal capital and sweat equity, the patience of some industry operatives – particularly cultivators – is fading fast.
Karen Ballou, chief financial officer at CultivatingRI LLC, wonders if the slow progress is a consequence of poor planning or is moving as designed.
By legalizing adult-use cannabis consumption statewide but only allowing seven licensed retail outlets at this point, the government has basically limited competition, some say.
“We have a handful of dispensaries and three of them are within a mile of each other,” Ballou said. “There is nothing near the border with Connecticut. People are bypassing us and going to Massachusetts. We are being handcuffed.”
State officials had projected $250 million in annual sales. However, monthly receipts have continuously hovered between $9 million and $10 million.
“There is no growth in this state like we should be seeing,” said Ballou, who has yet to turn a profit in more than eight years in business as a cultivator. “Anyone should be able to stop at their local dispensary on their way home from work, especially with the percentage of our population that uses cannabis. But if you are a cultivator selling to three dispensaries, you are lucky. We are just keeping our chin above water.”
After receiving a cultivator license, Ballou says she was assured by the R.I. Department of Business Regulation there would be no more than twenty-four cultivator licenses issued. Today, there are sixty-four.
“It is really unfair. We are cannibalizing each other. It should not be this way,” she said. “Some of the dispensaries are still taking over ninety days to pay. The state has given too much leverage, while we have nothing.”
But Ballou is not the only one who sees the clock is ticking.
At the May meeting of the Cannabis Advisory Board – a 19-member panel of industry professionals and community leaders that provides advice and recommendations to the commission – Chairman Ronald Crosson said “the commission’s regulation drafting is not occurring at the same pace as the [advisory] board and the subcommittee meetings,” according to the meeting minutes.
Ballou doesn’t blame the commission but feels there are greater forces at work behind the scenes.
“We are in this debacle because of the state,” said Ballou. “It's not the commission's fault. We all have a boss.”
Sen. Jonathan Acosta, D-Central Falls, a sponsor of the legalization legislation, says the yearlong delay in seating the three commissioners of the cannabis commission portended the current state of affairs.
“Now we are facing the consequences of that. It's been frustrating for me because I don't understand the delay. I want them to move faster. The folks who were in the medical game got a huge head start,” he said. “That’s not to demonize them. But they have a huge advantage.”
Acosta says it was also telling that a 2022 event attended by state officials to celebrate not only that Rhode Island met the timeline for starting retail cannabis sales but also their dedication to righting previous wrongs by carving out licenses for “social equity” applicants.
Acosta saw an irony in the fact that the deadline for a federal low-income food program had already passed.
“It speaks to the perverse incentives around money,” he said. “Nobody was rattling the cage for access to food for low-income people. But we lined up for this. The state was willing to get sales started before the infrastructure was set up. We made such a fuss over having these social equity licenses, and yet we haven't licensed anybody in a year and a half.”
For Ballou, who emptied her retirement account and envisioned setting up a profitable growing operation to someday leave to her children, there has been too much invested and there is too much at stake to call it quits.
“Most of us bet the farm on the farm,” she said. “We are all clawing to stay alive. If I were a regular retail business, I would have closed my doors five years ago. But we are all hanging in there to make it work because when the state does release the other licenses, they are going to need us.”
