Too few CT recreational cannabis licenses, critics say – Danbury News Times

Connecticut opened its first application round for certain recreational cannabis licenses Thursday, but several pro-legalization groups say the process that has been created could “significantly hamper” the state’s goal of creating an equitable market.

Their concern is that only 56 licenses, ranging from retailers to cultivators, will be issued to start, and that existing medical marijuana operators in the state are being given an unfair advantage since they can enter into an unlimited number of equity joint ventures.

The joint ventures are cannabis businesses that must be at least 50 percent owned or controlled by an individual, or individuals, who qualify as social equity applicants, which is determined by income and whether the person has lived in a disproportionately impacted area.

Led by The Marijuana Policy Project, the groups, which include Students for Sensible Drug Policy, CTCure, and the Minority Cannabis Business Association, sent a letter on Jan. 27 to Gov. Ned Lamont and Department of Consumer Protection Commissioner Michelle Seagull requesting changes be made to the licensing process.

They recommended the state only allow each existing medical operator to enter into two equity joint ventures in the initial round, and “substantially” increase the number of licenses available through the lottery system in the near term. They also raised these issues during public testimony last year on Connecticut’s adult use cannabis law as it made its way through the General Assembly, and in private meetings with DCP officials.

Most adult-use license types will be awarded through a lottery system, and the state plans to conduct multiple lotteries each year, according to DCP. Half of all license types will go to social equity applicants. Equity joint ventures are among the license types not subject to the lottery.

“Another lottery is going to happen this year, and there will be many more lotteries after that,” Kaitlyn Krasselt, DCP spokeswoman, said. “This was a way to efficiently move through the process.”

DCP will initially issue licenses for 12 retailers, four micro-cultivators, 10 delivery services, four hybrid retailers, 10 food and beverage, six product packagers, six product manufacturers and four transporters.

DeVaughn Ward, senior legislative counsel for the Marijuana Policy Project, said who gets licenses initially has major implications for how equitable the market will be going forward.

“The concern is that by the time they get around to doing more licenses, the economics of the market will be so in favor of the existing operators that it’s going to be very difficult for small business operators and social equity applicants to compete” Ward said.

In their letter, the marijuana groups said that’s particularly concerning for the licenses for cultivators who are “the life blood of any cannabis market,” providing supply to retailers, product manufacturers, food and beverage manufacturers, and delivery services.

Instead of allowing the current medical operators to create an unlimited number of cultivator and retail establishments, imposing a cap of two would allow for additional licenses to be made available through the lottery for equity and small business applicants, “creating some parity” between the equity joint venture and lottery application process, they said.

That would require a revision to Connecticut’s recreational cannabis law. Ward said the Marijuana Policy Project plans to lobby lawmakers, who will convene next week for the new legislative session, to make that change.

DCP has control over the number of licenses issued and Ward said he is hoping the department would makes changes in future rounds to increase the number of licenses available through the lottery to ensure a diverse market.

In the letter sent to Seagull and Lamont, the marijuana groups said that “while some may argue this approach might over saturate the market in Connecticut, restrictive licensing has proven only to benefit the illicit market.”

They also said low license numbers could lead to inadequate supply to meet demand, “thus inflating prices and allowing nearby states — once their legal markets are up and running — to siphon off business from Connecticut operators.”

Connecticut’s cannabis law allows the DCP commissioner to “set temporary lower per-transaction limits” to avoid cannabis supply shortages or address a public health and safety concern.

Previous reporting by Hearst Connecticut reporter Ginny Monk was included in this story.

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