Those hoping to enter Rhode Island’s adult-use cannabis market, nearly 3 1/2 years after dispensary sales launched via existing medical operators, are at a standstill after a federal judge granted a preliminary injunction on April 8.
State regulators in the Cannabis Control Commission (CCC) had planned to issue 20 of a statutory maximum of 24 adult-use retail licenses as early as May, but now a lottery process to award the licenses is on hold after Rhode Island U.S. District Court Judge Melissa R. DuBose granted the motion for three out-of-state plaintiffs on Wednesday.
The plaintiffs, including California residents Justyna Jensen and Justin Palmore, and Florida resident John Kenney, argued, in part, that they were wrongfully excluded from consideration for licensure because the Rhode Island Cannabis Act requires businesses to be 51% owned by an in-state resident to apply.
“Three individuals challenge the constitutionality of the act, alleging it violates the Dormant Commerce Clause and the Equal Protection Clause,” DuBose wrote. “Each of these plaintiffs contend that the act excludes them from the Rhode Island recreational cannabis market and that the act is unconstitutional because it expressly favors in-state residents over out-of-state residents.”
The application period for the licenses closed in late December, with 97 applicants submitted for the 24 available licenses to be awarded equally across six geographic zones, with each zone having one license reserved for a social equity applicant, one for a workers’ cooperative applicant, and two for general (open) applicants.
According to the CCC, only 20 of the 24 licenses were applied for, with two zones lacking interest for the worker cooperative and general licenses.
On the CCC’s website, the commission says it’s aware of the federal court decision and is “currently reviewing its implications for the adult-use retail licensing program,” adding that the injunction prevents the commission from proceeding with the license process and that “additional guidance will be provided as it becomes available.”
The next commission meeting is scheduled for April 17.
Under the state’s current program, eight medical cannabis dispensaries that were allowed to transition their operations to adult-use when sales launched in December 2022 have had a massive head start on aspiring new market entrants. These eight retailers capitalized on $120 million in sales in 2025, or roughly $15 million per store, the highest revenue rate in the nation.
The three plaintiffs hoping to enter this market argued in the lawsuit that the state’s license application requirements are unconstitutional.
Jensen, for example, has never lived in Rhode Island or a disproportionately impacted area, is not a member of an impacted family and has never been arrested for an offense that is eligible for expungement under Rhode Island law, requirements she said violate the Dormant Commerce and Equal Protection clauses.
The Dormant Commerce Clause is a doctrine in the U.S. Constitution that intends to prevent states from enacting laws that incorporate economic protectionism with policies that favor in-state businesses, therefore burdening interstate commerce. The clause aims to preserve a national market for goods and services.
Under cannabis’s Schedule I federal control status, interstate commerce is prohibited, meaning there is no national cannabis marketplace to protect from state economic isolationism, putting state licensing laws favoring in-state businesses in the crosshairs of judicial review.
For example, the U.S. Court of Appeals for the Second Circuit ruled in August that New York’s adult-use cannabis licensing structure, which favored applicants with past cannabis convictions under New York law, was unconstitutional.
“The Dormant Commerce Clause applies, and Congress has given New York no clear permission to enforce protectionist marijuana licensing laws,” according to the Second Circuit.
That ruling aligned with the First Circuit Court’s ruling from August 2022 that Maine’s state residency requirement for medical cannabis business owners was unconstitutional.
The First Circuit Court also holds jurisdiction over Rhode Island, which DuBose pointed out in granting the preliminary injunction this week.
“However, [the facts] that the case dealt with medical marijuana rather than recreational marijuana and discussed the Rohrabacher-Farr Amendment are far from compelling reasons to reject the circuit’s clear conclusion as binding precedent, as the defendants implore of this court,” DuBose wrote, referring to a federal rider that prohibits the U.S. Department of Justice from using funds to interfere with state-sanction medical cannabis laws.
The judge determined that, since there is no federally legal interstate market for medical cannabis either, the 2022 ruling in Maine would be “equally true” if the First Circuit were considering the state’s adult-use licensing scheme.
In Rhode Island, rather than rely on a binding First Circuit precedent, the CCC asked DuBose to follow a Ninth Circuit Court’s decision from January, which ruled that the Dormant Commerce Clause does not apply to cannabis under federal prohibition. That decision resulted from licensing schemes in Sacramento, Calif., and Washington state.
This circuit court split, between the Ninth Circuit and the First and Second circuits, sets the stage for potential interpretation in the U.S. Supreme Court.
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While DuBose said she respects the Ninth Circuit’s different approach, she said that decision was largely based on dissents penned in the Second Circuit’s ruling in New York. Furthermore, she indicated that the U.S. District Court in Rhode Island is not bound by the Second or Ninth circuits but instead by the First Circuit.
“This court is not persuaded that the case before it is sufficiently dissimilar to the issue considered in the First Circuit’s Northeast Patients Group such that it can disregard the majority opinion, which clearly concluded the Dormant Commerce Clause applies,” DuBose wrote. “Therefore, the court concludes the Dormant Commerce Clause applies to the recreational cannabis market.”
