Rhode Island hospitality and liquor industry representatives voiced their opposition to a proposed ban on restaurants and bars serving intoxicating THC beverages during a virtual public hearing with state cannabis regulators Monday afternoon.
Approximately 120 licensed retailers, including restaurants and liquor stores, have been serving hemp-derived THC beverages since August 2024, when the state’s Office of Cannabis Regulation began allowing the sale of products containing low levels of delta-9 THC.
State lawmakers last June charged the Rhode Island Cannabis Control Commission with preparing recommendations for regulating the sale on hemp-derived THC beverages. The commission presented its draft rules, including a proposed ban, during a Zoom webinar to solicit feedback before submitting the final recommendations to the General Assembly by March 1.
“Putting hemp THC-derived beverages on premise at a restaurant or bar is actually the safest way to consume these products,” Ryan Moot, manager of business development and government affairs for the Rhode Island Hospitality Association, told regulators.
Commission staff did not state why they recommend banning sales at businesses that allow on-site consumption.
Regulators were asked to study and propose what the state should do about hemp-derived drinks, most of which are produced out-of-state. Over the summer, the commission placed a moratorium on new retail licenses for businesses that allow on-site consumption.
By itself, hemp produces little to no THC, the compound most commonly associated with cannabis intoxication, and is typically non-psychoactive when first harvested, unlike other cannabis plants.
But its potency can be increased in a laboratory. And unlike cannabis products manufactured in Rhode Island, hemp-derived drinks are all tested at out-of-state facilities with different standards.
Products made outside Rhode Island would still be tested out-of-of-state under the draft rules, but the commission recommends those labs should be certified by the Rhode Island Department of Health (RIDOH).
“RIDOH has similar requirements for other industries — for example: water,” Carla Aveledo, chief of policy for the commission, said during the seven-minute presentation at the beginning of the 30-minute webinar. “Further recommendations would be to have hemp-derived THC beverages to be tested to the cannabis equivalent standards. That would include pesticides, heavy metals, residual solvents, cannabinoid profiles, and microcontaminants.”
That proposal drew no comments from the industry representatives who attended the webinar.
But a draft recommendation to restructure the tax on hemp-derived products did generate some discussion.
Existing regulations charge a 7% sales tax on hemp products. The commission recommends applying the state’s cannabis tax structure, which adds another 3% local cannabis excise tax on top of the existing sales tax. Alternatively, the commission recommends the state place a 15% tax on wholesale cost on hemp-derived drinks.
“That doesn’t really fall in line with the other states that are producing this,” Chris Morgan, CEO of Nice Beverage Co. in Providence, said.
Massachusetts regulators in May 2024 restricted the sale of intoxicating hemp-based products to only cannabis retail stores where they are taxed at a rate of 10.75% — on top of the state’s 6.25% sales tax and up to 3% local tax. State lawmakers in the Bay State are now considering a 10.75% excise tax on all hemp products.
As of 2024, Connecticut charged a $1 fee on each beverage can. That’s on top of the state’s sales tax of 6.35%.
Not mentioned in the commission’s slide deck: federal restrictions regulating hemp’s potency scheduled to take effect in November. Under the appropriations bill passed by Congress that reopened the federal government after a 43-day shutdown last fall, hemp products containing more than 0.4 milligrams of THC are effectively banned from being produced or sold.
Existing state regulations allow up to 1 milligram of THC per serving of a product or 5 milligrams per package. The commission’s slide deck only calls on state regulators to “establish a standard THC limit per can” and “establish a limit for the maximum amount of THC a single consumer can purchase at one time.”
Congress is considering legislation that would delay enforcement of the ban for two years, which could still allow THC-derived drinks to be sold. But even if the ban goes into effect, one hemp farmer questioned what change would even be needed.
“Our state already violates all federal laws when it comes to THC in cannabis,” said Mike Simpson, co-founder of Lovewell Farms in Hopkinton. “I’m not sure why all of a sudden … we need to follow the law when it comes to hemp cannabis.”
During public comment, Cannabis Administrator Michelle Reddish acknowledged “potential changes at the national level” and that state regulators have been meeting with their regional counterparts to come up with a plan.
“There are so many thoughts and ideas of what’s going to happen,” Reddish said. “But it’s still too very early.”
But not early enough for Simpson, who said he’s worried his business will remain caught in the regulatory crossfire.
“There’s a lot of hard work we’ve put in building this industry in the state,” he said in an interview.
Charon Rose, spokesperson for the state’s Cannabis Office, told Rhode Island Current the goal now is to have draft recommendations finalized in the “coming weeks” for members of the Cannabis Control Commission to review before sending to the General Assembly.
This story was originally published by the Rhode Island Current.
