Connecticut’s Adult-Use Cannabis Regulations

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By: Dustin Robinson

On June 23, 2021, Governor Lamont signed into law the Responsible and Equitable Regulation of Adult-Use Cannabis Act (“RERACA”) which establishes Connecticut’s adult-use marijuana industry.  Under the bill, certain cannabis convictions are expunged, licensing for marijuana businesses is established, limitations from the local government are permitted, and taxes on marijuana are established. The Department of Consumer Protection (“DCP”) will oversee the state’s adult-use marijuana industry and will establish the number of licenses it plans to issue. While the total number of licenses to be issued has not yet been determined, the DCP will only allow a maximum of one retailer and one marijuana micro-cultivator (which can sell at retail) per 25,000 residents, as determined by the most recent census until June 30, 2024, which is about 144 licenses each. Thereafter, a new limit will be established.

There are several types of licenses that will be offered by the DCP, which include:

  • Retailer – A retailer sells adult-use marijuana directly to customers. For a social equity applicant, the retailer fee to enter the lottery is $250, the fee for a provisional license is $2,500, and the fee for a final license or renewal is $12,500. For all other applicants, the retailer fee to enter the lottery is $500, the fee for a provisional license is $5,000, and the fee for a final license or renewal is $25,000.
  • Hybrid Retailer – A hybrid retailer sells both adult-use and medical marijuana. For a social equity applicant, the hybrid retailer fee to enter the lottery is $250, the fee for a provisional license is $2,500, and the fee for a final license or renewal is $12,500. For all other applicants, the hybrid retailer fee to enter the lottery is $500, the fee for a provisional license is $5,000, and the fee for a final license or renewal is $25,000.
  • Cultivator – A cultivator grows marijuana in a facility with at least 15,000 square feet of grow space. For a social equity applicant, the cultivator fee to enter the lottery is $500, the fee for a provisional license is $12,500, and the fee for a final license or renewal is $37,500. For all other applicants, the cultivator fee to enter the lottery is $1,000, the fee for a provisional license is $25,000, and the fee for a final license or renewal is $75,000.
  • Micro-Cultivator – A micro-cultivator grows marijuana in a facility that is between 2,000 and 10,000 square feet. The DCP will determine the starting size based on the projected marijuana supply. Subsequently, micro-cultivators can apply to expand their grow space by 5,000 square feet per year. The maximum size for a micro-cultivator is 25,000 square feet. After a micro-cultivation facility reaches 25,000 square feet, the business can apply for a cultivator license. The application for a cultivator license will not be conducted via a lottery. For a social equity applicant, the micro-cultivator fee to enter the lottery is $125, the fee for a provisional license is $250, and the fee for a final license or renewal is $500. For all other applicants, the micro-cultivator fee to enter the lottery is $250, the fee for a provisional license is $500, and the fee for a final license or renewal is $1,000.
  • Product Manufacturer – A product manufacturer creates marijuana products through cannabis extractions. For a social equity applicant, the product manufacturer fee to enter the lottery is $375, the fee for a provisional license is $2,500, and the fee for a final license or renewal is $12,500. For all other applicants, the product manufacturer fee to enter the lottery is $750, the fee for a provisional license is $5,000, and the fee for a final license or renewal is $25,000.
  • Food and Beverage Manufacturer – A food and beverage manufacturer creates cannabis-infused food and drink products. For a social equity applicant, the food and beverage manufacturer fee or delivery service fee to enter the lottery is $125, the fee for a provisional license is $500, and the fee for a final license or renewal is $2,500. For all other applicants, the transporter fee to enter the lottery is $250, the fee for a provisional license is $1,000, and the fee for a final license or renewal is $5,000.
  • Product Packager – A product packager is a person or company that is licensed to package and label marijuana products. For a social equity applicant, the product packager fee to enter the lottery is $250, the fee for a provisional license is $2,500, and the fee for a final license or renewal is $12,500. For all other applicants, the product packager fee to enter the lottery is $500, the fee for a provisional license is $5,000, and the fee for a final license or renewal is $25,000.
  • Delivery Service – Delivery service is a person or company licensed to deliver marijuana products from micro-cultivators, retailers, and hybrid retailers to customers and patients. For a social equity applicant, the fee to enter the lottery is $125, the fee for a provisional license is $500, and the fee for a final license or renewal is $2,500. For all other applicants, the fee to enter the lottery is $250, the fee for a provisional license is $1,000, and the fee for a final license or renewal is $5,000.
  • Transporter – A transporter is a person licensed to transport marijuana between licensed marijuana businesses, laboratories, and research programs. For a social equity applicant, the fee to enter the lottery is $125, the fee for a provisional license is $500, and the fee for a final license or renewal is $2,500. For all other applicants, the fee to enter the lottery is $250, the fee for a provisional license is $1,000, and the fee for a final license or renewal is $5,000.

Under RERACA, the DCP must reserve 50% of the maximum number of licenses it will issue to social equity applicants. To qualify as a social equity applicant, cannabis establishment license must be at least 65% owned and controlled by one or more individuals who: (1) have a median income for the last 3 years that is not higher than triple the state’s median income; and (2) lived in a disproportionately impacted area for either at least 5 of the past 10 years or 9 of their first 17 years of life. To meet the second requirement for social equity, a disproportionately impacted area is defined as a census tract that has either an unemployment rate of over 10% or a historical conviction rate for drug-related offenses greater than one-tenth. The DCP will publish a list of areas that qualify as disproportionately impacted areas by August 1, 2021, on its website.  In addition to 50% of the licenses being reserved, social equity applicants receive a 50% reduction in license fees for the first three renewal cycles.

The DCP will conduct two different lotteries for selecting marijuana licenses. The lottery for social equity applicants is first. As discussed above, at least 50% of the total licenses to be issued are reserved for social equity applicants. In the lottery, each entrant will receive a numerical ranking. After the DCP or a third-party lottery operator selects applicants, Connecticut’s Social Equity Council created by RERACA will verify that each application selected from the lottery qualifies as a social equity applicant without looking at any identifying information beyond what is necessary to establish if the applicant fits within the definition of social equity. An applicant that does not fit within the definition of social equity will be entered into the second lottery if the applicant pays the other half of the lottery fee. After determining the applicant does not qualify as a social equity applicant, the DCP or lottery operator will identify the next-ranked applicant who will then be reviewed. After 50% of the state’s licenses are issued, a second lottery will be conducted. In the second lottery, applications will be selected from unsuccessful social equity applicants in the first lottery and from all other applicants that do not qualify as social equity applicants.

There are several documents that are required to be submitted with each application. The DCP will likely develop many more application requirements as well. So far, each application requires:

  1. A contract with an approved seed-to-sale vendor in accordance with the bill’s provisions;
  2. Evidence that the applicant has the right to occupy the location where the cannabis establishment will be located;
  3. Evidence that the cannabis establishment obtained local zoning approval, if necessary.
  4. A labor peace agreement entered into between the cannabis establishment and a bona fide labor organization;
  5. A certification that they are using a project labor agreement for construction projects of $5 million or more.
  6. A social equity plan;
  7. A workforce development plan;
  8. Written policies for preventing diversion and misuse of cannabis and sales to underage persons; and
  9. All other security requirements set forth by the department based upon the specific license type;

While RERACA permits adult-use marijuana within the state, adult-use marijuana businesses may be restricted on a local level. Municipalities and residents can restrict adult-use establishments from operating. Specifically, municipalities can enact zoning regulations or local ordinances prohibiting the establishment of a marijuana establishment. In addition to prohibiting marijuana businesses, local government has the authority to place reasonable restrictions on business hours and signage. Yet, no municipality can restrict deliveries to consumers. The attitudes of local residents can also influence marijuana operations. If a local referendum is received that restricts marijuana establishments from operating and is (1) signed by 10% of the municipality’s voters and (2) is submitted at least 60 days before the date of any regular election, it will be included in the general election. If the referendum is approved by a majority of the voters in the election, marijuana establishments would be prohibited from operating in the municipality.

Connecticut is an exciting market for adult-use cannabis. The state is going to have several licensing opportunities. The DCP still needs to establish regulations for operators and applications, but the DCP expects licenses to be available by the end of 2022.[1]

[1] https://portal.ct.gov/Office-of-the-Governor/News/Press-Releases/2021/06-2021/Governor-Lamont-Signs-Bill-Legalizing-and-Safely-Regulating-Adult-Use-Cannabis

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