Cannabis program offering loans

Social equity businesses now can apply for low-interest aid from $50 million fund

Cannabis entrepreneurs in the state’s social equity program can now apply for low-interest loans from the Social Equity Council’s $50 million fund, according to the Connecticut Cannabis Chamber of Commerce.

The fund, which was approved by the legislature when the adult-use cannabis program was created, is open to those social equity partners with provisional licenses.

A business-accelerator program also is planned, according to the Social Equity Council.

“Access to capital is critical to the success of any social equity venture, especially in a capital-intensive industry like cannabis cultivation,” said Adam Wood, president of the chamber, in an email.

“Interest rates as high as 65% have been observed due to some of the uncertainties and legal challenges associated with lending to cannabis businesses,” he said. “Connecticut’s Social Equity Council deserves enormous credit for getting this $50 million loan program off the ground while it can still make a difference for these new businesses across our state.”

The state Social Equity Council also voted Monday to accept Cohnreznick’s recommendation on “reconsideration of six social equity lottery applications that previously failed to meet the ownership and control criteria established by the Council,” a spokesperson for the agency said.

“As a result of this vote, reconsidered applicants who have also met the residency and income criteria will be referred to DCP for the next steps in the review process,” the spokesperson, Kristina Diamond, said in an email.

“The Council also voted to accept Cohnreznick’s recommendation to modify the

SEC’S July 12, 2022 decision by approving social equity status for applicants The Goods THC Co and Hartford Cannabis Company, which had been previously denied,” according to Diamond. “Both applicants will now move forward in the licensure process established in section 149 of Public Act 21-1 for cultivators located in a Disproportionally Impacted Area.”

All applicants seeking social equity status are first reviewed by the auditing and accounting firm of Cohnreznick, a third-party reviewer hired by the SEC to create a comprehensive review system.

Social equity applicants, who will make up half the licenses approved by the state Department of Consumer Protection, are people who have lived in a “disproportionately impacted area,” one that had a high conviction rate or has high unemployment because of the so-called war on drugs.

Mark Christie of Bloomfield, who has

applied for a social equity license under the name FRC Holdings, still is working to raise the $3 million licensing fee that social equity applicants must pay to receive provisional licenses.

“I don’t know why you can’t borrow it for the $3 million,” he said. “That’s not even a commonsensical business conclusion. If you’re going to give it to people for startup costs, how can the license fee not be included in startup costs?”

He said a low-interest loan would help, however. “Obviously it’ll help some way,” he said. “Our budget is about $35 million to do everything that we’d like to do,” including the $3 million fee.

“It’s a very capital-intense business,” Christie said. “I think that loan program probably it’ll help anybody that needs money, but it’s definitely going to be a help for folks who are going for participation that isn’t in the category of cultivation.”

An applicant who wants to do delivery may need to spend $75,000 on a truck, Christie said. “If I can go get $50 or $60 [thousand] there,” he said.

“That’s good to know that it’s available,” he said.

“There’s going to be a lot of folks that it’s going to help. We’re certainly going to put in an application once I see what the terms and conditions are. … We’ll try to get in where we can fit in. I’m just glad that they’re doing something versus nothing,” Christie said.