Is Rhode Island Ready to Light Up?

ILLUSTRATION: GETTY IMAGES / GRIVINA.

On Easter Sunday, Kevin Rouleau tends the inventory of Hangar 420 — young clones rooting in one room, mature specimens headed toward harvest in another, buds drying in plastic bins in a third. A bespoke arrangement of pipes and tanks automatically slow-drips the perfect combination of nutrients and water to the crops growing under banks of LEDs emitting the perfect spectrum of light. The 18,000-square-foot Warwick facility is as spare, clean and sterile as a pharmaceutical plant — which, in a way, it is. Marijuana has been used as medicine for millennia.

Hangar 420 has been cultivating cannabis for two of the three state medical-use dispensaries since July 2021. CEO Octavius Prince founded the business — one of the state’s sixty-eight licensed cultivators — about five years ago after seeing his father suffer from Parkinson’s disease. Joe Dilley joined the operation in 2021 as the director of post-production. Dilley left a successful career as a corporate chef for a Philadelphia chain of Irish pubs in his mid-thirties to take a job as a leaf-cutter for Greenleaf Compassion Center in Portsmouth. The job was entry-level, slicing the dried leaves off the buds, eight hours a day, even as it sliced 70 percent off his previous paycheck. But he learned the business and moved up the management chain.

“I really believe in this product and I believe in its benefits,” he says.  

On the cannabis calendar, April 20 — Four-Twenty — is a day to partake, rally for legalization or protest the stigma. Depending on which origin story one believes, Four-Twenty is either the police code for a marijuana offense, the time in the afternoon that a group of California high schoolers in the 1970s smoked every day or the number of active chemicals in marijuana. Folklore aside, it is the single biggest sales day of the year.

Hangar 420 expects next year’s Four-Twenty to be epic.

“It’s going to change tremendously,” says Dilley. “Most cultivators are running at a fraction of what they are capable, with skeleton crews.”

For the last eight years, Rhode Island has had just three marijuana dispensaries for medical use; six more are expected to be open for business this time next year. And complete legalization is here. In late May, the legislature approved recreational adult use marijuana, and Governor Dan McKee signed the measure into law.

“If we stay with just medical, that market will dry up,” says Rep. Scott Slater (D-Providence), who sponsored the bill in the House. “People will go to Massachusetts and other places to get their medicine. The leadership realizes the importance of not only generating revenue, but of protecting the revenue we have.”  

Cannabis revenue has been expanding exponentially since California became the first state to legalize medical cannabis in 1996. Today, marijuana is a $32 billion industry in the United States,
according to a 2022 market report by New Frontier Data. Eighteen states, plus Washington, D.C., have legalized it for adult recreational use and thirty-nine allow for medical use, creating access for three-quarters of the adult population. In 2021, Rhode Island posted its highest annual sales figure yet of nearly $80 million. 

“We’re just so early in the industry’s growth,” says Kacey Morrissey, senior director for industry analytics at New Frontier Data. “The industry has already blown the top off of what people were expecting the industry sales growth to be at this point.”

Despite this, says Morrissey, “we should never discount the incredibly large population of cannabis consumers who are purchasing from the illicit market. In 2022 alone, we believe there were $100 billion of cannabis sales in the U.S., of which only $32 billion were purchased through legal channels.”

She points to Rhode Island, where it seems likely that a significant percentage of consumers are bypassing the dispensaries: “Rhode Island has one of the longest running medical programs, with the lowest patient saturation rate, of under 2 percent.”

As of March, the state had 18,239 registered patients, down from 19,152 in 2021. Longtime medical cannabis patients and activists Stu Smith and Ellen Lenox Smith say the state seems to value the program’s revenues over patients’ needs.

“This was not the vision of Thomas Slater,” says Stu Smith of the late sponsor of the medical marijuana dispensaries legislation. “The issue that comes up over and over again is the cost of medicine and access.”

“There’s a lot of people who don’t have the ability to use the compassion centers,” Ellen says. 

Three years ago, the General Assembly passed a measure adding six new licenses to be chosen by a lottery. After a lengthy selection process, those new dispensaries are expected to open in the next year.

“It’s been a long haul,” says Matthew Santacroce, chief of the Office of Cannabis Regulation. “This was the first time DBR was tapped for such an important and far overdue expansion. And coming with that was a lot of scrutiny to do this as fairly and transparently as possible. It has been a learning experience.”

The transition to a legal, adult-use regulatory structure will likewise impart lessons. The bill, submitted by Slater and his long-term legalization colleague in the Senate, Joshua Miller (D-Cranston, Providence), covered everything from regulatory oversight — an independent, three-member cannabis control commission — to the number of licenses — up to thirty-three retail licenses, including the current dispensaries, which could apply for a hybrid recreational and medical license — to excise and sales taxes. Adult sale and possession of one ounce is now legal. Rhode Islanders can grow small amounts and keep up to ten ounces for personal use at home. 

“We looked at what seventeen other states had done, and a lot of what’s in the bill is [best practices] from other states — Colorado, Washington, New York and Massachusetts,” says Miller. “We wanted to match the tax structure of our neighbors.”

For sponsors and advocates, the social equity provisions were also critical. The legislation sets aside one license in each of the state’s six regions for a worker’s cooperative retail outlet and another for minority applicants and communities disproportionately impacted by the war on drugs, supported by state grants and technical assistance. A coalition, including the Marijuana Policy Project, Reclaim RI, the Formerly Incarcerated Union of RI and the Working Families Party, also successfully pushed for automatic expungement of past cannabis arrest and conviction records as a more meaningful avenue for social equity.

Investors are moving fast. The industry is already consolidating as multistate operators snag available licenses. In August, Green Thumb, a Chicago-based manufacturer of cannabis products and a retailer with outlets in fifteen markets, purchased Summit Medical Compassion Center in Warwick. At least two of the dispensary lottery winners, Solar Therapeutics and Sweetspot, have operations in other states.

Organized labor is trying to keep pace. In April 2021, Greenleaf Compassion Center became the first unionized dispensary in the state after its workers voted to join United Food and Commercial Workers Local 328. Interest from other facilities in the region is high, says Sam Marvin, director of organizing. 

“It’s not every day we have the opportunity to form an industry which is good for workers, the patients and the consumer. We don’t need another low-wage, Amazon-style, high-turnover industry. These jobs should be good jobs with family-sustaining wages and health care.”

For cannabis entrepreneurs, the march from a business plan to a ribbon-cutting is fraught and slow — especially in places where cannabis is new. Financing can be difficult: Rhode Island has the nation’s highest dispensary license fee at $500,000, and banks typically have eschewed loans to companies selling a federally prohibited product. 

“Dedicated capitalization has been our biggest challenge. We don’t have access to traditional capital, so for us, it was banging on hundreds of doors gathering private investors,” says Jason Webski, CEO of Sweetspot, a multistate operator that cultivates in Warwick and holds the new dispensary license in South County.

Finding the right location requires navigating zoning restrictions, the local police, municipal officials and landlords, says Edward Dow of Solar Therapeutics, which owns three outlets in Massachusetts and won a license to open a dispensary in the West Bay area.

“I tell people: ‘You have to be creative. If you don’t have the resolve you need to see it through, you need not apply to do business in the marijuana space, because there’s a lot of curveballs coming your way.’

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Ellen Liberman is an award-winning journalist who has commented on politics and reported on government affairs for more than two decades.