Nearly 100 applicants are competing for 20 new cannabis retail licenses set to be awarded via lottery this May, but their hopes are on hold following a federal judge’s ruling this week that has paused the process. U.S. District Court Judge Melissa DuBose issued a preliminary injunction against the Rhode Island Cannabis Control Commission, the defendant in three lawsuits filed by out-of-state entrepreneurs who challenge the state’s residency requirement for retail licenses.
Judge DuBose’s order prevents regulators from conducting a license lottery or processing any retail license applications submitted by the December 29, 2025, deadline. “It’s very disheartening right now,” said Jason Calderon, a cultivator who applied for a retail license in North Kingstown. “This most certainly could have been avoided. All we’ve done now is give more time to the existing monopolies to be a monopoly.”
Charon Rose, a spokesperson for the commission, indicated on Friday that regulators are aware of the ruling and are assessing its implications for the adult-use retail licensing program. “At this time, the commission is not in a position to provide a definitive timeline,” she stated in an email to Rhode Island Current, promising additional updates as they become available.
Background of Legal Challenges
The legal challenges began in May 2024 when California cannabis entrepreneur Justyna Jensen filed a federal lawsuit against the Cannabis Control Commission, arguing that Rhode Island’s residency requirement for licenses under the 2022 Cannabis Act violates interstate commerce protections. Jensen has previously filed similar lawsuits in other states, including California and New York.
Jensen intended to be a majority owner of a social equity business, a license type reserved for individuals adversely affected by the war on drugs. A second lawsuit was filed by Florida resident John Kenney in May 2024, also contesting the residency requirement, followed by Justin Palmore, another California resident, who filed a similar lawsuit in November 2025.
None of these plaintiffs were among the 97 businesses competing for a license in Rhode Island after the state opened its application process late last year. The Rhode Island Cannabis Act, passed in 2022, aimed to establish 24 new retail stores statewide, with six licenses designated for social equity applicants and another six for worker-owned cooperatives.
Despite allowances for out-of-state investors and ownership, the law mandates that 51% of any cannabis company must be owned by a Rhode Island resident. Although DuBose denied Jensen and Kenney’s suits in February 2025, she found that the complaints were premature since state regulators had not finalized the rules governing retail licenses, which were enacted in May 2025.
State’s Response and Future Considerations
The state argued that the residency requirement enables regulators to maintain meaningful oversight over retail license holders. However, DuBose concluded that the requirement does not effectively promote valid state interests and noted that the plaintiffs would suffer irreparable harm, given that the commission stated it would not issue additional licenses beyond the mandated 24.
Attorney Allan Fung, representing several retail applicants, expressed frustration over the state’s delay in addressing these legal issues. “It’s frustrating that the state didn’t fix the statute and settle these issues earlier on, or find a compromise with these three plaintiffs, before people put their life savings on the line,” Fung remarked in a text message.
The licensing rollout has been sluggish, with over a year passing between the legalization of recreational cannabis and the commission’s formation in June 2023. The commission had to hire staff to draft proposals and review rules adopted in other states, culminating in the adoption of Rhode Island’s retail cannabis rules in May 2025.
Recent months have seen considerations to stagger the lottery process for the 20 licenses, but no final decision was made. Many applicants have incurred significant costs, including monthly rent on storefronts, while awaiting the outcome of the lottery. “My extremely frustrated clients have invested tens to hundreds of thousands of dollars following intricate rules at both state and local levels, only to have the rug pulled out from underneath them at the eleventh hour,” Fung added.
Regulations require each application to secure a premises, including zoning approvals, which has met with praise from local industry leaders. Rhode Island’s Cannabis Act ensures that those willing to invest the time and resources can find success. However, the court’s siding with plaintiffs who did not apply in Rhode Island has drawn criticism from those who have navigated the application process.
DuBose suggested that the state might consider refunding applicants who find the delay untenable or even transitioning current applications to a new process. Legislative efforts are underway to remove the residency requirement, with a bill sponsored by Rep. Scott Slater currently under review.
“It’s clear that we’re going to have to pass something to remedy this,” Slater remarked, emphasizing the need for more retail locations to open.