$3 million licensing fee

Concerns Over the Social Equity Program Rise As Connecticut Begins Accepting Applications

Concerns Over the Social Equity Program Rise As Connecticut Begins Accepting Applications - Marijuana Packaging

Concerns Over the Social Equity Program Rise As Connecticut Begins Accepting Applications

It is a win when any state legalizes recreational marijuana and a more significant success when states provide strong social equity programs. Minorities that have been targeted and disproportionately affected by cannabis laws deserve their stake in the cannabis industry, and states need strong equity provisions. However, as Connecticut begins to formulate its foray into the adult-use cannabis market, the state’s social equity program is raising serious concerns.

Initially, experts believed that Connecticut would set a new bar for social equity programs. Provisions included a business accelerator program to provide mentoring and technical support for equity applicants, and half of all adult-use licenses must go to social equity applicants. Both of these are massive incentives for applicants, but they come with an equally enormous drawback: the $3 million licensing fees. The staggering price is believed to be the highest of any social equity program in the country. Arizona is another state where the social equity program has come under fire, yet compared to Arizona’s $4,000 fee, Connecticut’s fee is 750 times greater.

Michelle Bodian is a senior associate attorney in Boston’s and New York’s Vicente Sederberg offices. She is also the lead on Connecticut licensing. She said there was nothing Connecticut’s Social Equity Council could do about the price since the fee was written into the legalization bill that the governor signed into law. She added that not even the Social Equity Council seems to know why the fee is so astronomical, saying, “They similarly have been scratching their head at every public meeting.”

Amber Littlejohn, executive director of the Minority Cannabis Business Association, agrees with Bodian that the fee is a considerable barrier for potential applicants. She also has another concern surrounding existing operations having a leg up over new business owners. Littlejohn believes that “Existing operators will get early access to the market and unlimited access to the market. It’s yet another example of policies supporting and creating oligopolies.” Medical cannabis cultivators in Connecticut have a head-start with facilities and resources, and they can now also apply for recreational licenses. While the fee is also $3 million for these businesses, it is reduced by half if they take on a social equity partner. The fear is the same as the one Arizona was criticized for; established businesses will come in and partner with minorities to get access to licenses and maintain financial control.

Connecticut is also only offering a 90-day window to place applications. This time frame may leave potential applicants scrambling to get everything in order in the three months. Bodian says applicants are “excited about the opportunity…But the question is whether these businesses can come together in time.”

Yet another hurdle for social equity applicants is an income threshold applicants must meet to apply. In the words of Bordian, when all of these requirements add up, it is a “head-scratcher how you can check all these boxes.”

There is no doubt that $3 million is a hefty sum, no matter what background applicants are from. Along with the income threshold and tight application due date, the main concern is that minorities who were disproportionately affected by cannabis laws and who live in neighborhoods targeted by the police will not be able to raise the necessary funds.
Social equity programs are falling short across several states, and Connecticut is on the path to joining those ranks. It is up to lawmakers who have so far been silent to comment on their reasoning behind the $3 million fees. However, since the state began taking applications last Thursday, there is little anyone can do. The 90-day window is not budging, and neither is the income threshold. Once the licenses are chosen, social equity proponents will be able to see what minority-owned businesses will make their mark on Connecticut’s adult-use market. The hope is that truly deserving entrepreneurs have secured the licenses to provide consumers with any pre-rolls, water pipes, weed containers, and lots more.

Connecticut’s adult-use program is supposed to roll out something this year.

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