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Frustrations rise over delayed lottery to license new marijuana dispensaries in RI

Target 12

WOONSOCKET, R.I. (WPRI) — Joel Trojan knew he was taking a gamble when he applied to open a medical marijuana dispensary in Woonsocket. The application fee was $10,000, with only six applicants to be randomly selected for a coveted license.

But Trojan didn’t know the lottery would be repeatedly delayed by the state, leaving him and other applicants stuck paying tens of thousands of dollars in rent for empty buildings, waiting to see if they can open businesses. Applicants had to secure premises and zoning approvals before applying.

“So it’s $30,000 to date,” Trojan said of the rent he’s paid at an empty former bank building on Diamond Hill Road. “We thought the lottery might be in January or February of this year. It’s been delayed until now, and it appears it might be delayed until next year at this point.”

The R.I. Department of Business Regulation originally planned to hold the lottery in early 2021, soon after reviewing 45 applications that were submitted to the department by December 2020.

The plan is to randomly select one applicant from each of six geographic zones, in order to spread the availability of medical cannabis more evenly throughout the state.

But it took longer than expected to review and qualify the applications; applicants were notified if they made the cut in April.

Then DBR received an notice of appeal from one of the four applicants that was disqualified.

Atlas Enterprises, owned by a Maryland man named Christopher McGoff, had applied for the lottery for a proposed dispensary on J.T. Connell Highway in Newport. The application was disqualified, DBR officials wrote in a letter, because Newport does not allow retail marijuana facilities under its zoning ordinance.

The denial letter said Atlas didn’t respond to DBR’s letter in February about their lack of zoning approval. The agency also faulted Atlas for not disclosing that former state representative and attorney Bob Flaherty was listed as a director for both Atlas and another applicant, or that McGoff had purchased an ownership stake in a Rhode Island cultivation facility.

DBR originally estimated that the appeal would take place over the summer, and the lottery would finally be held the first week in August. But a date is still not even set for the appeal hearing, as the two sides argue over discovery.

At a status conference in the case Thursday morning, Flaherty said he might depose DBR officials over their responses to questions he asked them as part of the proceeding. He also suggested other applicants be disqualified, including for turning in their documents late, which hearing officer Catherine Warren reminded him would not then make Atlas qualify for the lottery.

“This license may be worth hundreds of millions of dollars,” Flaherty said during the hearing.

After the hearing, Flaherty declined to speak to Target 12 about the grounds for his appeal. McGoff, whose resume lists him as an author and columnist who holds a government security clearance, also did not return a phone call seeking comment.

The next status conference was set for Sept. 17, with no date set for the actual appeal hearing.

Matt Santacroce, the state’s chief of cannabis regulation, declined to comment on the delayed lottery after Thursday’s status conference.

Dispensary applicants, cannabis cultivators and medical patients are meanwhile frustrated by the delay. State lawmakers expanded the medical marijuana program from three dispensaries to nine back in 2019 specifically to provide more access for medical patients.

Rhode Island’s three existing dispensaries are in Providence, Warwick and Portsmouth, making it difficult for patients in other areas of the state to access the medicine.

“The person in Westerly, the closest place he can go is to Warwick or over the bridges to Portsmouth,” said Armand Lusi, president of the Rhode Island Cultivator Industry Association.

“The lottery should’ve happened by now,” said Lusi, who didn’t apply for the compassion center lottery but does have a cultivation facility in Warwick. “It’s not fair at all. … I don’t understand the basis for their appeal.”

The more than 60 licensed growers in Rhode Island can currently only sell to the three existing dispensaries, which also grow their own cannabis. Lusi said for that reason most cultivators are not yet profitable, years into starting their businesses. They’ve been eagerly awaiting the six new dispensaries to open.

“It’s frustrating that they’re appealing it,” said Trojan, who also has a cultivation facility in Pawtucket run by his daughter and her husband. “I don’t see how they’re going to win the appeal. It seems like it’s just a delay, and it’s hurting the rest of us.”

Trojan had also submitted a second compassion center application for Pawtucket, hoping to open a dispensary in the same location where Livity LLC currently grows cannabis. But it was disqualified for not securing zoning approvals from Pawtucket in time for the application deadline. Trojan is not appealing the decision.

“The rest of us are trying to play by the rules,” he said.

Newport appears no closer to allowing marijuana dispensaries in the city. The Newport City Council voted last week to extend the moratorium on cannabis retail until Nov. 15. The measure requires a second passage at the next meeting.

Newport Mayor Jeanne-Marie Napolitano told Target 12 there’s not enough parking on J.T. Connell Highway for a marijuana dispensary as proposed by Atlas, and said residents of the north end of the city dislike the proposal.

“They say, you want to put a marijuana dispensary in our area, but you wouldn’t put it on Bellevue,” she said, referring to the mansion-lined avenue in the city.

Despite the lack of movement in Newport, state officials don’t plan to move forward with the lottery until Atlas’s appeal is over.

“At this juncture, we plan on conducting the lottery upon the conclusion of the administrative proceeding,” DBR spokesperson Brian Hodge said in an email. “We continue to work to move the proceeding forward expeditiously while satisfying all our due process obligations.”

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Connect with her on Twitter and on Facebook

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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