State cannabis license chances low for equity applicants

With more than 15,000 applications for retail cannabis licenses in Connecticut, Hugh Gallman knows his chances are slim.

“Slim to none,” Gallman said. “It’s the luck of the draw.”

The 48-year-old New Haven native is among those interested in getting into Connecticut’s cannabis market, which is targeted to launch at the end of this year. But only 12 retail licenses are available to start, with half reserved for equity applicants.

Gallman and three of his business partners applied as social equity applicants, who must meet a variety of criteria including living in a “disproportionately impacted area” and having an average income over the last three years of no more than about $235,000.

The impacted areas were determined based on past drug convictions and current unemployment rates. Gallman said he and his partners have prior cannabis convictions, which in his case included selling marijuana. He said he received a pardon last year.

“With legal cannabis, I see an opportunity for a lot of us individuals who were exposed to the war on drugs,” Gallman said.

That background resonated when he and his partners went out in search of financial backers, he said, and was a major intent behind legislation: to ensure those who were targeted by the war on drugs have an opportunity to benefit from the legal market. The rules stipulate that equity applicants must hold at least a 65-percent stake in a cannabis establishment, once opened, and list all backers by name in the application.

Equity and non-equity winners will be selected in separate state-run lotteries. The cannabis Social Equity Council will vet the winners from the equity lottery to ensure they meet all the criteria. The state’s existing 18 medical dispensaries can apply to become hybrid retailers, without having to go through the lottery.

Some have criticized what they see as a loophole in the lottery process: there’s no limit to the number of applications an individual can submit. Critics argue that undermines the intent of Connecticut’s law to create a marketplace that is equitable.

The non-refundable application fees for retailers are $250 for equity applicants and $500 for non-equity applicants. Some applicants likely submitted hundreds of applications each, in some cases duplicate submissions, to increase their chances of getting selected. Gallman said he and his partners only submitted one application.

Andréa Comer, chairwoman of the social equity council and deputy commissioner at the state Department of Consumer Protection, said in an interview on WNPR’s Where We Live this week that between 15 and 20 applicants put in multiple submissions.

“On the one hand, we have robust applications,” Comer said. “On the other hand, the question is will there be dominance among certain applicants in terms of the number of applications they submitted.”

The state plans to hold multiple lotteries and DCP can’t issue a license to an applicant that already has two licenses of the same type or in the same license category.

New Jersey, which raked in nearly $2 million on its first day of retail sales, is the latest example of how lucrative the recreational cannabis industry can be for those who are able to get in. The state, which has a population about three times the size of Connecticut, currently has 12 dispensaries.

“Who wouldn’t want to be part of a billion-dollar industry that was once illegal, and you had those who were incarcerated and became convicted felons,” Gallman said.