A federal judge in Rhode Island handed marijuana social equity a significant defeat when she halted the issuance of new cannabis retail permits in that state, finding that a residency requirement in state law likely violates the U.S. Constitution.
U.S. District Court Judge Melissa DuBose’s April 8 order comes in a lawsuit brought by plaintiffs that includes a California resident at the center of similar challenges to state cannabis laws across the country, court records show.
Rhode Island cannabis permit lottery halted under constitutional challenge
Rhode Island’s $120 million cannabis market has so far been limited to the eight existing medical marijuana operators, who were allowed to sell to adults 21 and over starting in December 2022.
Ninety-seven prospective cannabis businesses have submitted applications for one of up to 24 permits that state regulators say they’ll issue via a lottery, as the Boston Globe reported.
That’s already been contentious, with existing operators trying to convince state regulators to issue fewer permits to avoid market saturation.
But DuBose’s order includes a temporary injunction that has halted the lottery entirely ahead of more court hearings, records show.
Are marijuana social equity programs constitutional?
The challenge began when Justyna Jensen and two other plaintiffs – Florida resident John Kenney and California resident Justin Palmore – first sued state authorities in May 2024.
In their lawsuit, they alleged that state law granting preference in adult-use cannabis retail licensing to Rhode Island residents violates the Constitution’s Dormant Commerce Clause and Equal Protection Clause.
At the time, DuBose dismissed the complaint, finding the lawsuit was premature since Rhode Island regulators were still finalizing rules, including standards for marijuana social equity permits.
The plaintiffs filed an appeal. In the interim, Rhode Island lawmakers finalized rules, including determining that the state Cannabis Control Commission could award up to 24 new retail permits via lottery.
In rules finalized last spring, preference is given to applicants who lived in low-income areas or had cannabis offenses on their records – but only if the low-income areas or offenses were in Rhode Island.
What’s next for cannabis social equity in Rhode Island?
After the rules were finalized, the First Circuit Court of Appeals returned the case to the district court, where DuBose halted the lottery earlier this week.
The preliminary injunction will last until future arguments, when it could be made permanent.
Her ruling cited findings from other appellate courts that social-equity laws prioritizing state residents are unconstitutional.
Such constitutional challenges are blamed in part for years-long delays in opening markets or awarding permits in other states, perhaps most notably New York.
