After already delaying new entrants into its $167 million market, Rhode Island cannabis regulators are mulling reducing the number of new retail permits to give existing operators a better chance of success.
But that’s infuriating applicants who have invested time and cash in hopes of obtaining a permit, according to WPRI-12, as Rhode Island becomes the latest state to wrestle with capping the number of cannabis businesses.
As overall annual cannabis sales numbers decline in mature markets amid price compression and competition, existing operators across the country are calling for license caps or moratoriums on issuing new permits.
Though controversial, limited-license states have long been seen by marijuana multistate operators and small businesses alike as the best environment to avoid problems like market saturation – and achieve profit.
Should states cap the number of marijuana licenses allowed?
Rhode Island, where adult-use cannabis sales began in December 2022, is already a limited-license state.
The market has been limited to the eight existing medical marijuana operators allowed to sell to adults 21 and over. Initially, state cannabis regulators were supposed to issue up to 24 additional retail permits, but so far have not done so.
According to WPRI, regulators have already cut the number of new permits that will be available to 20 – and are considering a “phased rollout” that could see new permits awarded slowly.
No final decision was made at the state Cannabis Commission during a meeting Friday, WPRI reported. The commission meets again in April.
But the idea of an even stricter permit cap is encouraging existing operators and infuriating businesses hopeful of scoring a license, WPRI reported.
How many cannabis permits should be allowed?
“I’ve seen a good market go bad extremely fast,” said Jonathan Leighton, chief operating officer of Mother Earth Wellness, a retailer in Pawtucket, according to WPRI.
“It is in my opinion that Rhode Island has a chance to continue to save the cannabis industry in the state for existing cultivators and retailers if it is strategic and thoughtful in its rollout.”
In response, several hopefuls to enter the market claimed to have already spent hundreds of thousands of dollars preparing their businesses for the application process.
According to WPRI, operators pointed to nearby Massachusetts as a cautionary tale.
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Do limited-license cannabis markets work better?
Massachusetts is enjoying record cannabis sales but has five to six cannabis stores per 100,000 people – nearly six times as many as Rhode Island, according to a presentation given to the Rhode Island Cannabis Commission on Friday.
And in Massachusetts, state regulators are considering a halt to new cultivation permits.
That’s in addition to a cannabis industry group in Michigan, where prices are declining, calling for a license cap last year.
Nearby Connecticut has a cap on cannabis permits. And under legislation sent to Virginia Gov. Abigail Spanberger, adult-use retail locations in that state would be capped at 350.
By comparison, New York – the country’s fastest-growing market – has no adult-use permit caps.
