Rhode Island’s recreational cannabis rollout is facing delays and a potential reduction in retail licenses as regulators weigh the risks of market over-saturation.
Nearly four years after the state legalized adult-use marijuana, the original plan to issue 24 new retail licenses is up in the air, according to The Boston Globe.
Frustration mounts among Rhode Island cannabis applicants
The Rhode Island Cannabis Control Commission is considering a phased rollout that would issue fewer licenses at first. The shift stems from watching neighboring Massachusetts, where unlimited licensing led to steep price drops of up to 70% and widespread business closures.
The potential policy pivot is frustrating the 97 business owners who applied by the Dec. 29 deadline. Regulators require prospective retailers to secure real estate and zoning approvals before entering the license lottery.
As a result, many applicants have spent tens of thousands of dollars on nonrefundable application fees, legal counsel and monthly rent for empty storefronts.
Cultivators also are anxious for the new stores to open because there aren’t enough retail outlets to move their product.
Rhode Island has eight hybrid dispensaries, which generated $120 million in sales last year. With limited competition, cannabis prices in the state average $5.67 per gram, compared to $4.17 in Massachusetts.
Balancing cannabis market stability and equity
Existing dispensary owners are urging the state to act cautiously, suggesting officials issue as few as six to eight new licenses to avoid the retail crash seen across state lines.
Social equity applicants and new retail hopefuls argue that severely capping licenses only protects existing monopolies and keeps consumer prices artificially high. They want the state to issue all 24 licenses at once and let the market dictate how many stores the region can support.
Regulators plan to hold the retail license lottery in June, but hurdles remain, CCC spokesperson Charon Rose told The Globe.
The state must finish reviewing all 97 applications to ensure compliance.
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The commission also is navigating three federal lawsuits challenging a rule that requires store owners to be Rhode Island residents.
Adding to the friction, the commission is operating with just two members after chair Kim Ahern resigned last fall to run for attorney general.
