Title kind of explains it. In both the Development Configuration and Preferences -> Languages -> Ruby SDK and Gems settings I have the correct Ruby version/Gemset selected. But it still just saying:
Error running Development: the_factory: [No Rails found in SDK]
I've used RubyMine on tons of projects and this has never given me a problem. But this is a new project, using Rails 5 and Ruby v2.3.0, and I just can't figure out what's going on here.
This is in Ruby SDK and Gems settings in RubyMine 8:

And this is my Development config:

Update
When I run rails server in my project folder, it works as expected.