How to Open a Dispensary in Rhode Island

How to Open a Dispensary in Rhode Island in 2024

Rhode Island permits qualified individuals to open dispensaries in any of the geographic zones it designates for cannabis businesses. Interested persons or entities can apply for compassion center, hybrid, or cannabis retailer licenses with the Rhode Island Department of Business Regulation. The department requires dispensary license applicants to submit detailed business plans, financial plans, operational manuals, and security plans as part of their applications.

Why Open a Dispensary in Rhode Island?

Licensed compassion centers began selling cannabis products to non-patients in December 2022 after the legalization of recreational marijuana in the same year. According to the updated Office of Cannabis Regulation Data, compassion centers recorded total cannabis sales of $86 million between December 2022 and September 2023.

While the number of registered patients with active medical cards dropped from 15,062 in December 2022 to 10,817 in September 2023, the demand for recreational cannabis increased in the same period. The state generated over $3 million in cannabis taxes within the first four months of recreational marijuana sales. According to New Frontier Data, the Rhode Island cannabis market may grow by more than 300% from $62 million in 2023 to $274 in 2026. Opening a dispensary in Rhode Island presents a lucrative opportunity, given the potential for significant market growth in the coming years.

Types of Dispensary Licenses in Rhode Island

The types of dispensary licenses in Rhode Island are:

• Compassion Center License: This permits licensed entities to dispense medical cannabis to registered medical marijuana patients
• Hybrid Cannabis Retailer License: This allows compassion centers to sell cannabis to recreational consumers
• Adult-use Cannabis Retailer License: With this license, dispensaries can dispensae marijuana to only adults aged 21 years or older

How to Get a Rhode Island Dispensary License

To get a Rhode Island dispensary license, an applicant must meet the following requirements:

• Applicants must be aged 21 years or older
• They must have no prior criminal convictions
• They must comply with local zoning rules or municipal approval
• They must comply with tax obligations

If an applicant satisfies these requirements, they should take the following steps to apply for a Rhode Island dispensary license:

• Register online: Use the Rhode Island Cannabis Licensing Portal to register a new account for the business
• Prepare required documents: The OCR accepts mail, in-person, and email applications sent to:

State of Rhode Island Department of Business Regulation ATTN: Office of Cannabis Regulation 560 Jefferson Boulevard, Suite 204 Warwick, RI 02886 Email: DBR.MMPCompliance@dbr.ri.gov (for compassion center licenses) DBR.HybridLicensing@dbr.ri.gov (for hybrid cannabis retail licenses)

• Pay the application fees:
• Compassion center license - $10,000
• Hybrid cannabis retailer license - $125,000
• Cannabis retailer license - $30,000
• Pre-license inspection: Before issuing a dispensary license, the state agency will carry out a pre-license inspection

The Rhode Island Department of Business Regulation (DBR) established the Office of Cannabis Regulation to oversee and regulate the state’s medical marijuana program. Interested and eligible persons can apply for compassion center licenses whenever the OCR announces an open application window. After reviewing submitted applications, the OCR will conduct a random draw to designate qualified applicants to the six geographical zones listed in RI Gen. Laws § 21-28.11-10.3.

The Rhode Island Cannabis Act aims to issue 33 dispensary licenses to qualified business entities. This includes 24 cannabis retailer licenses and 9 compassion center licenses. According to the Act, the new Cannabis Control Commission will create licensing rules and announce the application window for recreational marijuana dispensary licenses.

Information and Documents Required for a Dispensary License in Rhode Island

The Office of Cannabis Regulation requires the following documents and information from dispensary license applicants:

• Personal information of the applicant, key members, interest holders, and shareholders. It is also important to attach any of the following means of identification:
• Valid U.S. passport
• State-issued IDs
• Driver’s license
• The business organizational chart showing the applicant’s name, key members, and ownership structure
• The non-profit compliance certification form
• Disclosure of financial interests/divestiture plan
• Business plans
• An operation manual showing the dispensary’s procedures and policies for record keeping, employee training, advertising, labeling/packaging, patient confidentiality, handling product recalls, and environmental impacts
• Security plans
• The company’s Certificate of Good Standing issued by the Rhode Island Department of State
• Taxpayer Status Affidavits of the applicant and other key members listed in the business organizational chart
• A certificate or letter issued by the local municipality showing that the applicant complies with the local zoning laws
• A draft diagram of the proposed dispensary. This should show the following:
• The vault for storing marijuana products
• The location of security alarms and cameras and surveillance recording storage
• Patients’ access areas and parking capacity
• Limited access areas
• Access for disabled persons
• Property deeds or lease agreements of the dispensary location
• Fingerprints and consent to background checks. Individual applicants and all members of business entities are subject to background checks
• Documents showing that the intended dispensary location complies with the zoning requirements in RI Gen. Laws § 21-28.6-12(f)(2)

What Plans Do You Need to Open a Dispensary in Rhode Island?

Dispensary license applicants in Rhode Island must include business, security, and financial plans in their applications. A cannabis dispensary business plan in the state should include the following:

• Information on the applicant’s experience in running a medical marijuana dispensary or non-profit organization
• Comprehensive schedule for commencing operations
• Product and services description
• Staffing strategies showing a detailed explanation of the number of full-time equivalent (FTE) positions and the corresponding categories for which employees will be hired. This should also reveal the total payroll expenses
• Analysis and evaluation of Rhode Island cannabis market
• Target cannabis consumer profile and demographics
• Sales and marketing strategy, including pricing approach
• Charitable care services and assistance for patients in need
• Financial plan, which should include the following:
• Debt, funding, and equity sources
• Applicant's financial capability
• Funding for the initial launch and a sustainable long-term financial plan
• Capital improvement and operational funding
• Financial supervision plan
• Income projections for at least three years

A detailed security plan, in compliance with RI Gen. Laws § 21-28.6-12(c)(1)(vi), is expected to show the following:

• Safety procedures for medical emergencies such as fire and chemical spill
• Employees training on basic security procedures
• Description of security alarms and video surveillance recording systems
• Security plans as regards third-party vendors
• Safety plans as regards cash management or electronic payment processing

Are There Municipal Requirements for Opening a Cannabis Dispensary in Rhode Island?

According to RI Gen. Laws § 21-28.11-15, cities and counties in Rhode Island can hold referendums to permit or prohibit cannabis dispensaries in their jurisdictions. Municipalities that permit cannabis dispensaries can establish zoning ordinances in compliance with state rules and local needs, and prospective dispensaries must comply with them.

How Long Does It Take to Get a Rhode Island Dispensary License?

Getting a cannabis dispensary license in Rhode Island can take several months due to the OCR approval process. After reviewing submitted applications, the OCR typically announces the date for designating approved applicants to their geographic zones.

Where Can You Locate a Cannabis Dispensary in Rhode Island?

Compassion centers and recreational cannabis retailers can establish their businesses in any of the six geographic areas created under the Rhode Island Cannabis Act. Additionally, approved dispensaries must maintain a minimum of 1,000 feet from private or public schools. Licensees must also comply with local regulations regarding where to locate cannabis dispensaries.

Can Licensees Have More Than One Dispensary Location in Rhode Island?

No. Compassion center licensees in Rhode Island can establish only one cannabis retail store in a designated geographic zone.

How Much Does It Cost to Open a Marijuana Dispensary in Rhode Island?

In Rhode Island, opening a dispensary may cost between $1,000,000 and $2,000,000. Below is a breakdown of costs associated with opening a cannabis dispensary in the state:

• Registration fees:
• Compassion center license - $500,000
• Hybrid cannabis retailer license - $125,000
• Lease for retail space: This can vary depending on the location, size, and property condition. In Rhode Island, the cost of a retail space can range from $15 to $50 or more per square foot annually. Meanwhile, initial leasehold renovations may cost up to $10,000
• Inventory cost: A dispensary needs several pounds of cannabis to start. The cost per pound of cannabis varies from $1,000 to $3,000, depending on quality and source
• Security costs: Security systems, surveillance equipment, and personnel can collectively cost anywhere from $15,000 to $50,000 or more
• Employee salaries: Budtenders, security personnel, managers, and other staff employed in a Rhode Island cannabis dispensary typically earn between $20 and $25 per hour
• Operational costs: These include utilities, rent, insurance, marketing, and other day-to-day expenses. On average, operational costs can range from $10,000 to $30,000 or more per month
• Legal and professional costs: This includes attorney fees, licensing fees, compliance consulting, and other professional services. Licensees may spend between $5,000 and $30,000, depending on the complexity of the regulatory environment and the need for legal guidance

Do You Need an Insurance Policy for a Cannabis Dispensary in Rhode Island?

Insurance is not mandatory for marijuana dispensaries under the Rhode Island Cannabis Act. However, licensed dispensaries are encouraged to buy insurance policies to protect their operations and assets. Cannabis business insurance in Rhode Island can protect licensees against potential risks, including theft, fire, liability claims, and compliance violations. Recommended cannabis business insurance policies for Rhode Island dispensaries include the following:

• General Liability Insurance - This covers bodily injury, property damage, advertising injury claims, and customer accidents on the premises
• Product Liability Insurance - This covers claims related to product defects or adverse effects from cannabis products sold by the dispensary
• Commercial Property Insurance - This protects against damage to the dispensary's property, including inventory, equipment, and structures, due to vandalism, fire, and theft
• Workers' Compensation Insurance - This provides coverage for workplace injuries and illnesses. Rhode Island law mandates workers' compensation insurance for most businesses
• Auto Insurance - If the dispensary offers delivery services, it's crucial to have commercial auto insurance. This policy can protect against accidents, property damage, and injuries that may occur during deliveries
• Cyber Liability Insurance - This can help cover the costs associated with data breaches, cyberattacks, and the resulting legal and regulatory expenses
• Fidelity Bond - A fidelity bond, also known as employee dishonesty coverage, protects against losses resulting from employee theft or embezzlement. This policy is important for cash-intensive businesses, including cannabis dispensaries
• Security and Theft Insurance - Provides coverage for losses related to theft, break-ins, and other security breaches

Insurance premiums paid by dispensary owners in Rhode Island vary depending on the location, size, value of inventory, security measures in place, claims history, and coverage limits. Premiums can also be influenced by the type of policies selected and the insurance provider's underwriting criteria.

How to Get a Grant to Open a Dispensary in Rhode Island

• Personal investment - This involves using personal savings or assets to finance the dispensary
• Relatives and friends - This involves seeking financial support from close acquaintances who are willing to invest
• Traditional loans - Dispensary owners can apply for personal loans from banks or other financial institutions
• Venture capitalists - This involves offering a share of equity in the cannabis business to attract investors
• Partnership - Dispensary owners can partner with individuals or entities who can provide capital in exchange for ownership or shared profits
• Crowdfunding - This involves raising funds from a larger group of individuals, often through online platforms
• Angel investors - Licensees can secure funds from high-net-worth individuals who can raise capital and provide expertise in exchange for equity or convertible debt
• Cannabis-specific lenders - This involves borrowing from private lenders or credit unions with special interests in cannabis businesses

Does Rhode Island Have a Social Equity Program for Cannabis Dispensaries?

There is no social equity program for marijuana dispensaries in Rhode Island.

Does Rhode Island Tax Marijuana Dispensaries?

Yes. The Rhode Island Cannabis Act imposes a 3% local cannabis excise tax and a 10% state cannabis excise tax on every cannabis product purchased by consumers. In addition to the cannabis taxes, the state also imposes the standard 7% Sales and Use Tax on every cannabis retail sale. The Rhode Island Division of Taxation collects all state taxes, including marijuana taxes. While registered medical cannabis patients are exempted from cannabis taxes, they are still subject to the 7% sales tax and 4% compassion center surcharges.