CRAVEInfused founder Zara Salmon, left, leads a discussion on social equity licenses that will soon be offered for six Rhode Island cannabis retailers at a policy salon at Lovewell Farms on Monday. (Christopher Shea/Rhode Island Current)
HOPKINTON — As the state’s newly-formed Cannabis Control Commission starts drafting regulations on Rhode Island’s budding recreational marijuana industry, a group of cannabis workers and advocates is already working to advance some recommendations of their own.
Still wet from rain, a group of around 30 met at Hope Valley’s Lovewell Farms on Monday evening to focus on an aspect commissioners have promised to prioritize: social equity measures for prospective business owners most likely to have been impacted by the War on Drugs.
Since April, Salmon and other advocates have looked through the state’s 115-page cannabis law to close loopholes and ensure that Rhode Island can be a model for the rest of the country. But the state already stands out with the highest license fees in New England.
“It’s a hefty endeavor,” Zara Salmon, founder of the Providence-based plant-lifestyle brand CRAVEInfused, told the group. “But nothing is impossible — with community and organizing we can go against Big Cannabis. We got this.”
Rhode Island cannabis law allows for 24 retail licenses. Of those, six are reserved for social equity applicants and another six are reserved for worker-owned cooperatives. The cannabis legalization act states that a social equity applicant is someone who has “been disproportionately impacted by criminal enforcement of marijuana laws,” but the law as written does leave some room for exploitation, Salmon said.
Participants at the gathering broke out into smaller moderated groups to discuss qualifications for social equity, funding for social equity applicants, cannabis education and technical services, lab testing, ways to prevent monopolies, and licensing types. The three members of the Cannabis Control Commission were invited to attend Monday’s session, but none did.
There was at least representation from the state, as the gathering saw an appearance from Rep. David Morales, a Providence Democrat, who spoke on the importance of what suggestions the group can make for state officials.
He said that while Rhode Island’s cannabis law is among the most progressive in the nation, there is room for growth as the recreational industry gets its footing. Namely, Morales said joining the cannabis market should be accessible to all, regardless of income.
“I would make the argument that, right now, it’s a pay-to-play system,” he said, noting it costs $15,000 for prospective dispensaries to enter a lottery to be considered for an application. “A lot of us don’t have the startup costs to be part of a lottery.”
Barriers to capital
The lottery isn’t the only cost to start a dispensary.
Under the Rhode Island Cannabis Act, retail operations must pay a fee of $125,000 to the Department of Business Regulation (DBR) in order to sell adult-use recreational marijuana, along with paying a yearly $500,000 licensing fee.
While that fee doesn’t sound daunting to more established businesses, most impacted by the War on Drugs don’t have the capital to keep up with those demands.
“They don’t have that cash,” said Sarah Ouch, a former employee at Portsmouth-based Greenleaf dispensary who now works for the DBR.
In Connecticut, the license fee is $25,000 and $50,000 to renew (though the cost for social equity applicants there is only $25,000). In Massachusetts, the application fee is up to $2,000 depending on the size of a retail facility and an annual fee of up to $50,000.
Maine’s application fee is $5,000 and Vermont’s is $1,000. New Hampshire is still considering legalizing recreational cannabis.
Salmon said she would like to see those fees reduced for social equity applicants, much like in Connecticut.
I would make the argument that, right now, it’s a pay-to-play system.
– Rep. David Morales, a Providence Democrat
Another solution, proposed by United Food and Commercial Workers Local 238 organizer Emma Karnes, is to have the Cannabis Control Commission offer social equity applicants “provisional licenses” which would allow the state to perform thorough inspections on a business’ plan before offering an official license.
This license, Karnes said, would at least allow social equity startups to have a better chance to secure funding from investors since they can show they’re on the path to opening up.
“Right now, nobody wants to be the first risk in the door,” she said.
Though provisional licenses are not one of the five named in Rhode Island’s cannabis act, the law does empower the Cannabis Control Commission to issue additional types or classes.
Rhode Island cannabis law allows for 24 retail licenses. Of those, six are reserved for social equity applicants and another six are reserved for worker-owned cooperatives.
All politics is local
Karnes said another hurdle applicants will face is getting approved by whatever municipality they hope to set up shop in.
She said that in neighboring Massachusetts, many proposed dispensaries were shot down “seemingly for no reason” from local zoning boards.
“It’s all political,” she said.
To remedy that, Karnes said Massachusetts’ Cannabis Control Commission drafted guidance to ensure local boards have set reasons for approving or rejecting dispensaries — which in turn helps applicants know what to put together.
Karnes said she’d like to see similar guidance issued by Rhode Island’s commission.
“As with everything, we want to do what Massachusetts did and patch it up and make it better,” Karnes said with a smile.
How should social equity look?
Another other issue advocates hope to address is the definition of social equity applicant.
Salmon highlighted that applicants only need to have at least 51% of their workforce be former drug offenders or residing in an impacted community, while the owner does not have to.
“That’s a plantation,” said Raquel Baker, who works for the PVD Flowers Cooperative, a cannabis dispensary that registered with the Secretary of State’s office in February.
Salmon said the state needs to be especially diligent in vetting applications since the state only allows for six social equity licenses.
Salmon also expressed concern over what assistance social equity applicants and impacted communities get. The law notes that except for $125,000 initial license fee, all remaining fees collected by the state are to be placed in a “medical marijuana licensing account.”
All remaining revenues would go into the state’s general fund.
“There’s not going to be enough money for the fund,” Salmon said. “If you have all 24 licenses applied at one time, then at most we’ll have $3 million.”
“Ah, so they just played us,” Baker said.
There is one beneficial loophole in the legalization act, Salmon said. With the Cannabis Control Commission now formed, she said the law empowers the state to divert more fees to the fund social equity applicants can use— something she said her and fellow advocates will press for.
Salmon said she and fellow advocates hope to have their final regulation proposals ready for the commission by the end of November, with ways to redefine social equity applicants to the General Assembly by January.
“It’s just taking things one day at a time,” Salmon said.
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