Connecticut Joining Its Neighbors To Fully Legalize Cannabis

Connecticut’s legalization efforts looked all but certain to fail at the beginning of the week, but now it’s headed to the governor’s desk to be signed into law. Sales could begin in May 2022. During the state’s normal legislative calendar, lawmakers passed a similar bill, but Republicans pushed back and it never made it to a vote. The session ended and the measure was moved to the special session. Although Republicans got the blame for the delay, several state Democrats had also expressed concerns. In the state’s recent special session, the Senate approved a full legalization bill by a vote of 19-12.

Governor Stands Firm

Governor Lamont, who had been supportive of legalizing adult-use sales, signaled his displeasure with the social equity language. “Gov. Ned Lamont is threatening to veto a bill legalizing and taxing marijuana because it does not go far enough in addressing the historical trauma of the war on drugs and ensuring equity in the state’s budding recreational marijuana industry.” Paul Mounds, Lamont’s chief of staff said the law, “does not meet the goals laid out during negotiations when it comes to equity and ensuring the wrongs of the past are righted. To the contrary, this proposal opens the floodgates for tens of thousands of previously ineligible applicants to enter the adult-use cannabis industry.”

That’s when an amendment was added that stated that those applicants must have an average household income of less than 300% of the state median over the three tax years immediately preceding the person’s application or was a resident of a disproportionately impacted area for no less than five of the 10 years immediately preceding their application. Other criteria include people who were incarcerated for the sale, possession or cultivation of cannabis or had a parent, spouse or child who was imprisoned for such an offense.

Advocacy Groups Celebrate

The Marijuana Policy Project played a leading role in the fight to reform Connecticut’s cannabis laws. “Connecticut is on the cusp of becoming the latest state to legalize cannabis. This year has shown us that state legislatures are capable of rising to the challenge to end cannabis prohibition. A supermajority of Americans have made it clear that they favor a system of legalization and regulation rather than the status quo. This victory will add to the momentum towards cannabis policy reform in other states and at the federal level,” said Karen O’Keefe, director of state policies for the Marijuana Policy Project. MPP noted that S.B. 1201 will legalize possession of up to one and a half ounces for adults 21 and over. The bill will go into effect on July 1, 2021. Adults will be allowed to securely cultivate cannabis at home starting July 1, 2023. A full summary of the bill is available here, and a comparison between it and other state legalization laws is available here.

NORML also highlighted that the law addresses those with past criminal records for activities involving up to four ounces of cannabis who will have their convictions automatically expunged. Those with convictions for more serious offenses can petition the courts for relief. Licensed retailers will be subject to both state and local regulations, and local municipalities may impose moratoriums on cannabis-related businesses. Marijuana flowers available at retail facilities will be capped at 30 percent THC, while concentrated products (except vape cartridges) will be capped at 60 percent THC. Retail purchases will be subject to the state’s sales tax. Designated public consumption facilities are permitted under the law in municipalities with 50,000 residents or more.

Connecticut is just the latest domino to fall as states begin to repeal their failed prohibition of marijuana and replace it with a sensible system of legalization and regulation. Never before has the momentum for legalization looked as strong as it does in 2021, with four state legislatures already approving bills to ensure state law reflects the overwhelming will of their state residents in just a few short months,” said Erik Altieri, NORML’s Executive Director. “Federal lawmakers need to stop dragging their feet and get the message: it is time to take swift action to end our federal prohibition and allow states to legalize marijuana as they see fit.”

Licensing

Cannabis legal firm Vincente Sederberg said that beginning in September, existing medical cannabis dispensaries can apply for “hybrid retailer” licenses to also serve adults 21 and older. They will be required to submit a conversion plan and pay a $1 million fee, which could be cut in half by creating an equity joint venture with a social equity applicant as the majority owner. Existing medical cultivators can also begin cultivating adult-use cannabis later this year by paying a fee of up to $3 million.

If the application period for a license type closes and DCP receives more than the maximum number of applications, a third-party lottery will be used. Applicants for new cannabis businesses will have to pay a small fee to enter, then a larger fee if they receive a license. Licensing fees for qualified social equity applicants will be 50% lower, and equity applicants will receive a 50% discount on renewal fees for the first three years. The law also creates $50 million in bonding for the cannabis business accelerator program, workforce training developed by the Social Equity Council, and start-up capital for equity applicants.

Connecticut established a thoughtful licensing scheme that is intended to create a diverse, accessible, and robust cannabis industry,” said Michelle Bodian, a Connecticut native and senior associate attorney in the New York office of national cannabis law firm Vicente Sederberg, whose firm has worked on social equity and small business policy matters and programs around the country. “Eight classes of licenses will lend to a wide array of opportunities and other benefits for Connecticut businesses, large and small,” Bodian said. “A regulated adult-use cannabis market will create a wave of new jobs and generate significant tax revenue for the state and local governments. It also bodes well for all the ancillary industries that will supply these cannabis businesses with products and services.”

Unions Have High Hopes

UFCW Local 371 President Ronald Petronella and UFCW Local 919 President Mark Espinosa released the following joint statement:

“Connecticut working families need an economy that puts them first. With this bill, Connecticut can create thousands of good-paying cannabis jobs that will strengthen our communities and help to speed our economic recovery as we emerge from the pandemic.

“States across the Northeast have already tapped into the economic promise of cannabis. Creating a strong cannabis market here in Connecticut with clear regulations that prioritize good wages and worker safety is essential to ensuring we build the foundation for long-term economic growth in the industry. As the unions for thousands of Connecticut frontline workers, we look forward to working to create thousands of good paying, family sustaining cannabis jobs here in Connecticut.”

 

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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