Conn. cannabbis licensing process differs from other states
Connecticut’s model for licensing businesses in its nascent recreational cannabis market is fairly unique since entering the lottery requires information from applicants that’s not pre-reviewed, a state spokesperson said.
Connecticut also doesn’t have a cap on the number of licenses it can issue, unlike many other states, said Kaitlyn Krasselt, spokesperson for the state Department of Consumer Protection.
“This is intended to allow the market to grow at a measured pace and promote the success of the new businesses established,” Krasselt said. “The method employed by Connecticut was not specifically modeled after one state, but instead was developed after consideration and analysis of other adult-use state application processes.”
While other states, such as Illinois and Rhode Island, have lottery systems, they are not operating quite the same as Connecticut’s.
Connecticut announced Tuesday that it will open on Feb. 3 its first 90-day application period for retailers and disproportionately impacted area cultivators. Application periods for other license types will open on a rolling basis.
Attorney Michelle Bodian said she’s already had several clients reach out to her about working on their applications to start a business in Connecticut. Bodian’s firm, Vicente Sederberg LLP, focuses on cannabis-related issues.
Bodian said she’s excited to see the opportunities the new market will offer in Connecticut and encouraged applicants to remain patient if they are not selected in the first lottery round.
“Don’t be discouraged, given the fact that this is a lottery and there’s only so much control you can have,” Bodian said. “This is going to be a robust market for many, many years to come.”
Most licenses will be awarded through a lottery system. Each of the license types will have two lotteries — one for general applicants, the other for social equity applicants. Social equity status is determined by income and whether the applicant has been a resident of an area disproportionately affected by the war on drugs.
Half of all lottery-issued licenses will go to social equity applicants.
The state plans to conduct multiple lottery rounds every year, Krasselt said.
It’s become more common over the years for states to create unique systems of awarding licenses by pulling together elements from states with existing markets, said Rick Garza, agency director of the Washington State Liquor and Cannabis Board. Garza is also first vice president of the Cannabis Regulators Association.
“All the states have done it differently,” Garza said. “There’s not really one set of rules or regs that rules the day or may be better than one or the other.”
Collaboration has improved over the years, and the association was created in part to formalize the process. States work together when they are first getting started and as they encounter new issues, Garza said.
Washington, which used to have state-operated liquor stores, decided on the number of cannabis retailers to license in a similar way, based on the population. That state licensed fewer initially, and added more as time went on, Garza said.
In November, Garza answered questions and told the Connecticut Social Equity Council about Washington’s experience as one of the first states to legalize recreational cannabis.
He said Wednesday that Connecticut’s plan to issue a few licenses and add more over time seemed prudent. The number of licenses can have a direct effect on the overall market and price of the product, he told council members in November.
“You can always open more stores later, right?,” he said Wednesday.
The Department of Consumer Protection worked with the state’s Social Equity Council to set the number of licenses it would grant “after considering the impact on the marketplace and the operational capacity of the agencies involved in application review,” Krasselt
said.
Several states also have social equity elements to their licensing. Massachusetts, for example, has certain license types set aside for social equity applicants, among other measures to ensure those most impacted by the war on drugs are given a fair chance, said Shawn Collins, executive director of the Massachusetts Cannabis Control Commission.
Massachusetts also provides free training and technical assistance through its social equity program, according to its website.
Connecticut’s Social Equity Council approved a plan Tuesday to provide free technical assistance, marking the final step before the state announced the number of licenses it would accept in this first
lottery.
The two states have several differences in the start-up of licensing. Massachusetts didn’t have a lottery system. Instead, applicants first got approval for their businesses from the localities where they wanted to operate, Collins said.
Then, they can reach out to the state for a license, Collins said.
Working together will remain important, Collins added. It can be difficult for regulators to navigate the cannabis market because the substance is still illegal federally.
“This has really been a really important, not just a Massachusetts effort, but a regional effort and a nationwide effort,” he said. “… We are all in a way struggling and working through this together.”