When Connecticut first legalized weed, what stuck out was a proposed social equity program called by some to be one of the country’s best. It promised greater diversity and opportunity for minority entrepreneurs impacted negatively by the so-called war on drugs.
First, the social equity program wants planned facilities in the upcoming adult-use market to total 250,000 square feet. Applicants will have to expense this while waiting for a license.
That’s a big ask. But what complicates getting a license is Connecticut asking applicants to come up with $3 million per. The price tag is being called the highest fee any applicant’s had to overcome if they want to do legal marijuana.
The payment is a clause baked into Connecticut’s recreational marijuana bill. Lawmakers agreed upon the bill and signed it into law last year. And with that law in place, there isn’t much anyone can do to change it without a ton of legal complications.
Michelle Bodian is a senior associate attorney with Vicente Sederberg and at the top of the advocates for equity in Connecticut licensing. She doesn’t understand how the state can knowingly put such a huge obstacle in place.
White billionaires will find any number of ways to circumvent the fee. Meanwhile, the average entrepreneur has no way to get that kind of money. On the federal level, weed remains illegal. That means no federally insured institutions can give loans to start a cannabis business.
So, how’s the average person of color supposed to get their hands on three million?
The goal is to launch Connecticut’s adult-use market later in 2022. Analysts estimate the first year alone will bring in $250 million. By the fourth year, the state’s weed business should total three-quarters of a billion dollars.
The executive director of the Minority Cannabis Business Association, Amber Littlejohn, calls the fee nothing more than a threat to equity applicants. And that’s only the beginning of the problem.
Littlejohn says, “Existing operators will get early access to the market and unlimited access to the market. It’s yet another example of policies supporting and creating oligopolies.”
Her statement means that existing, cash-rich medical cannabis cultivators with existing facilities will apply for adult-use licenses and get them first.
Existing growers also benefit from a reduction in the $3 mil fee. They can get it cut by 50 percent if they bring in a social equity partner.
Another challenge is the equity applicant must own at least 65 percent of their weed business. Worse, the recreational weed law has a provision that all licensed producers maintain an escrow account of $2 million.
Like in New York, legal weed saw Connecticut’s plan as setting social equity to a high standard. The state proposed awarding licenses to half of all social equity applicants. The program was to include a business accelerator offering mentoring and technical assistance.
About the fee, Bodian says grimly, “It’s a lot of money, no matter what your socioeconomic status is.”
