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How to Start a Medical Marijuana Dispensary (Compassion Center) in Rhode Island

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Rhode Island is currently accepting applications for six new medical cannabis dispensaries also known as compassion centers.

A Compassion Center acquires, possesses, cultivates, manufactures, delivers, transfers, transports, supplies, or dispenses medical marijuana, and/or related supplies and educational materials, to qualified patients and caregivers.

The Department of Business Regulations (DBR) released the application information and requirements and is open for application submissions until December 15, 2020, at 3:00 PM ET. A lottery-based system will be used by DBR in awarding new licenses.

If you’re serious about starting a Compassion Center in Rhode Island, you should check out the How to Start a Medical Marijuana Business package to understand everything you need to know and do, from start to finish, to make this a reality.

. . .


Setup Your Corporate Entity

You need to form your cannabis company entity on a not-for-profit basis, which is the requirement of the state for Compassion Centers. The state requires this type of corporate entity for the mutual benefit of its patients. However, it is not required to be recognized as a tax-exempt organization by the Internal Revenue Service – which is not currently possible anyways.

Find a Compliant Location

You’ll need to find a compliant business location that meets the state, county, and city zoning regulations. This is one of the biggest make-or-break items that will directly impact whether you will get licensed or not, so you need to ensure your property will meet all zoning regulations. The general requirements of the location/property are:

  • Must meet the local city and county zoning laws and prove this via a certificate or letter from an authorized zoning official stating this is true.

  • Not located within one thousand feet (1,000’) of the property line of a preexisting public or private school.

Write a Dispensary/Compassion Center Business Plan

You are required to include in your application packet a business plan that includes:

  • Applicant’s experience running a non-profit organization or other business, and applicant’s experience running a medical marijuana business, if any.

  • Detailed description of amount and source of equity, debt, and operating capital for the proposed compassion center, including financial statements or other documentation establishing the source of any funds;

  • Start-up funding and long-term financial feasibility plan;

  • Detailed timeline for initiating operations;

  • Funds for capital improvements and operating needs;

  • Financial capability;

  • Financial oversight and compliance plan;

  • Services for hardship patients and charity care;

  • Three (3) year projected income statement;

  • Number and category description of FTEs (full-time equivalents) and associated payroll expenses (with benefits) required for staffing;

  • Description of products and services;

  • Marketing, promotional and sales plan including pricing strategy;

  • Industry and market assessment and analysis; and

  • Segment and customer profile.

Note: Our Medical Marijuana Dispensary Business Plan includes all of these details (and more) so you can save time and money and ensure this requirement is taken care of by professionals who’ve gotten approvals in every major cannabis market.

Submit a Licensing Application

Each application for a compassion center shall include, but not be limited to the following:

  • A non-refundable application fee of $10,000.

  • The applicant’s legal name(s), certificate of incorporation, or certificate of authority, copies of articles of incorporation and bylaws.

  • A draft diagram of the proposed facilities, including:

    • Where within the facility the medical marijuana will be stored, processed, packaged, manufactured and dispensed,

    • Where security alarms and cameras and surveillance recording storage will be located

    • Patient access areas

    • Limited access areas

    • Patient parking capacity and access for persons with disabilities in accordance with applicable law

    • Showing the location of the facility relative to streets and other public areas.

    • A description of objective parameters (such as distances from streets and public areas) and/or proposed measures (such as black-out window shades) that ensure that marijuana at the premises shall not be visible from the street or other public areas.

    • Documents evidencing either ownership of property or lease agreement with the owner of the property to allow the operation of a compassion center on the property, if the property has already been purchased or leased at the time of the application or a signed letter of intent for such a sale or lease.

  • Business Plan

  • Security and Safety Plan

  • Operations Manual for the compassion center including policies, procedures, and documents for the following:

    • Record keeping and records retention;

    • Education and training of employees and volunteers;

    • Job descriptions, employment contracts, and volunteer agreements, if applicable;

    • Patient and personal data privacy;

    • Patient confidentiality, education, counseling, and outreach;

    • Alcohol and drug-free workplace;

    • Assuring steady supply for patients;

    • Labeling and packaging;

    • Advertising;

    • Voluntary and mandatory recalls of medical marijuana products;

    • Ensuring any outdated, damaged, deteriorated, mislabeled, or contaminated medical marijuana is quarantined from other medical marijuana and destroyed;

    • Environmental impact overview and plan for operations;

    • Process validation for all smokable and vapable products, as applicable.

  • A certification regarding nonprofit compliance

  • A disclosure and certification as to owners and other key persons/interest holders

  • A copy of the management agreement or management agreement proposal and a list of persons who have any ownership or financial interest in or operational or managerial control over the management company (only if applicable).

  • An organization chart and schedule of compensation/remuneration.

  • Evidence of appointment of a compliance officer for the compassion center and the compassion center’s legal and operational compliance plan.

  • Licenses, disciplinary actions, denials of applications

  • Tax Affidavit

Ensure You Meet The Prerequisites For License Issuance

Any compassion center applicant selected for licensure must satisfy the below requirements before a license for a compassion center will be issued:

  • Annual Compassion Center Registration Fee of $500,000

  • Final Information and Documentation to be Supplied

  • Documents confirming ownership or executed lease agreement as to the compassion center premises.

  • Evidence of full compliance of the facility with the local zoning laws

  • A current Certificate of Occupancy (or equivalent document)

  • Updated interest holder/key person disclosure and updated certification of nonprofit status and compliance

  • Evidence of completion of a divestiture plan

  • If there are any material deviations from the approved application, the applicant must submit a request for and obtain a variance from DBR.

  • In the event the applicant holds a cultivation license that will merge into the compassion center, the applicant shall provide documents evidencing the merger and/or transfer of assets and operations

  • Evidence that the applicant has acquired a seed to sale Medical Marijuana Program Tracking System and all necessary equipment and software to implement tracking.

Install Operations Infrastructure

Now that you’ve submitted your applications and been awarded a temporary or permanent license for starting a medical marijuana dispensary in Rhode Island, it’s now time to start hiring people, buying equipment, and setting up your dispensary policies and procedures to ensure legal compliance and smooth operation.

Market Your Marijuana Dispensary

Your dispensary will live or die based on how well you market it to the public. There are some major pitfalls and hurdles you’ll have to overcome in order to do this legally and effectively. Marijuana businesses no longer sell themselves, so you’ll need to ensure you’ve got a great Marijuana Dispensary Marketing & Advertising Plan in place to ensure success.

Pay Taxes & Renew Licenses

Pay all applicable taxes and be sure to understand the below items will be required for licensing renewal on an annual basis:

  • Compassion center licenses shall be issued for a one-year term.

  • Annual renewals shall be submitted on such forms and include such information as required by DBR.

  • DBR’s review of compassion center renewal applications shall include consideration of whether the compassion center is adequately providing patients with access to medical marijuana at reasonable rates.

  • An annual inspection shall be part of the annual renewal process.

  • Renewal applications shall include an updated certification of nonprofit compliance and an interest holder/key person disclosure and certification.

  • The renewal period is one year from the date of the first issuance and will occur annually on that date unless and until the license is revoked or surrendered.

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