Rhode Island, which licensed its first medical marijuana dispensary in 2013, has long required cultivators and dispensary owners to be residents of the state. While out-of-state investors are allowed, the majority shareholder had to be a Rhode Island resident.

The plaintiffs in the case argued the residency requirement violates the Dormant Commerce Clause and the Equal Protection Clause of the Constitution.

DuBose said in her decision the plaintiffs have a “likelihood of success on the merits,” and ordered the state to halt the lottery.

The decision upends what has already been a contentious process of getting the first recreational-only stores up and running since the 2022 legalization law. Prospective applicants have decried the slow process, which included a long delay in setting up the Cannabis Control Commission, which is tasked with licensing the retailers.

The commission then took about a year and a half to issue regulations for the issuance of new licenses. They finally started taking applications last year, which were due in late December.

There are 97 applicants in total, many of whom told the Globe they have been paying rent on their storefronts for months while waiting to see if they will be selected. The regulations required that each application have a premises secured, including zoning approvals from the city or town where the store is to be located.

The prospective dispensary owners also paid thousands in application fees and other costs, which DuBose suggested the state could refund.

“The CCC can remedy or minimize some of the third-party harm by, for example, refunding application fees or transferring current applications to the new application period,” whenever a new lottery happens, DuBose said.

The case reflects the ongoing murky legal waters as more states legalize and regulate cannabis, while it remains illegal federally. Since the product cannot be transported across state lines, Rhode Island officials have long argued that a residency requirement allows them to keep a closer eye on the industry. DuBose rejected those arguments.

“A partial residency requirement has no impact on the State’s ability to continue tracking marijuana cultivation and distribution,” DuBose wrote in her decision. Similarly, with retailers, the cannabis commission “can exercise its lawful authority over the dispensary, and the license holder will be required to comply with all state laws and all of the CCC’s rules and regulations,” DuBose said.

Charon Rose, a spokesperson for the cannabis commission, said they were “reviewing the ruling and evaluating next steps.”

Prospective cannabis retailers were already up-in-arms in recent weeks over a discussion in the Cannabis Control Commission to slow down the process further by staggering the issuance of the 24 licenses, rather than selecting them all from the lottery at once.

“Massachusetts is light-years ahead of us,” Karen Ballou, who applied to open a store on Main Street in Richmond, told the Globe last month.

Cannabis administrator Michelle Reddish told a Senate committee last week that with more competition opening, there were concerns about prices dropping too low.

“Being able to introduce them in a staggered manner will allow for us to look at the market data and assess how things are progressing,” Reddish said.

As it stands, there are eight dispensaries currently selling recreational cannabis in Rhode Island after being grandfathered in from the medical marijuana program.

They sold a combined $120 million worth of cannabis last year.

Lisa Holley, a cannabis lawyer who represents seven of the current applicants, said the ruling adds yet another element to the “slow rollout” of licenses. She said the General Assembly should move quickly to amend the law and remove the residency requirement.

The cannabis commission would then likely need to create new rules and accept out-of-state applicants before proceeding.

“If they go at the pace they have been in the past, we won’t see a lottery until perhaps next year,” Holley said. Her clients have shelled out tens of thousands of dollars in lease payments, she said.

“This process did not have to be so onerous,” Holley said. “It is government inefficiency on display.”

This story has been updated with comments from Charon Rose and Lisa Holley.

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Steph Machado can be reached at steph.machado@globe.com. Follow her @StephMachado.