Connecticut’s First Draft of Recreational Marijuana Bill – what it means for those interested in starting a marijuana business

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Connecticut lawmakers have outlined a "first draft" of its recreational marijuana legislation: House Bill No. 7371. Although the bill will inevitably change, it sheds some light on the underlying intentions of the legislators and what their priorities are, summarized below:

"Equity status" for impacted communities and individuals

The bill establishes an "equity" status for applicants seeking a retailer, cultivator, or manufacturer license. Individuals from communities disproportionately impacted by high rates of arrest and conviction, as well as individuals who can demonstrate their prior (illicit) experience with growing, selling, or manufacturing marijuana, including those who have prior convictions, are given preferential treatment. This includes reduced application and license fees and priority application status allowing their application to "skip to the front of the line".

Advantage given to existing medical dispensaries and producers

The bill gives special treatment to the existing medical marijuana businesses in the state. Medical dispensaries and producers are given the same priority status as those that qualify for "equity" status, allowing the existing medical marijuana businesses to skip the line as well. Effectively, this will mean the first recreational marijuana businesses to obtain a license and be ready to "open for business" will be the existing medical marijuana businesses that apply for a recreational license. It will take the "equity" applicants some time to get up and running even after obtaining a license, whereas the medical businesses are already operational.

Additionally, the bill allows the Commissioner to authorize existing medical dispensaries and producers to dispense recreational marijuana and for the medical producers to supply marijuana to be sold for recreational use.

The bill does very little to discourage monopolization by big business

The bill calls for the Commission to conduct a study to determine if it is feasible to establish a "cannabis micro business" retailer license, but it does not go as far as creating this license type from the outset. In addition, the bill creates three different marijuana cultivation license types: small, medium, and large. Then the bill sets the fees for the "large" cultivator: not less than $25,000 to submit an application, not less than $75,000 to receive a license, and $75,000 to renew the license. The bill does not detail the fees for "small" or "medium" size cultivators or explain what the threshold is for each of the three sizes. At least the lawmakers have contemplated "small" cultivators in this initial draft.

Another restriction the bill creates is to prohibit a holder of a retailer license from simultaneously holding either a cultivator or a manufacturer license. A cultivator license holder can hold a manufacturer license; however, a retailer can only hold a retailer license. It is unclear how the prohibition applies to business entities. Perhaps a later draft of the bill will make clear the limitation applies to anyone owning a beneficial interest, or to any immediate family members, etc., in an effort to prevent "creative" business structures that circumvent the restriction.

Notably missing, however, is any prohibition of common ownership of more than one marijuana business. In other words, there is no limit on the number of retailer licenses that a single person (or business entity) can own at one time. This is a striking difference from the Liquor Control Act, which prohibits a single owner from having more than five liquor permits at one time.

We are eager to see what changes will come in future versions of this bill. Most of all, we hope the legislature provides adequate protections for small businesses and Connecticut-based businesses in the future revisions.