The state has committed to helping those impacted by the war on drugs get involved in the legal cannabis industry through social equity programs, but some experts say applicant fees are a barrier to entry.
The nine adult-use cannabis licenses now offered by the state have application fees spanning from $100 to several thousand dollars, but the $3 million cost for a provisional disproportionately impacted area cultivator license sticks out to some.
A DIA zone is identified in Connecticut’s law as an area that has a historical conviction rate for drug-related offenses greater than one-tenth or an unemployment rate greater than ten.
“Everyone needs to be finding investors or business partners to bring that capital to the table, because to qualify as social equity there is an income cap,” said Michelle Bodian, a lawyer with cannabis law firm Vicente Sederberg LLP. “There’s a little bit of a disconnect there.”
Bodian counsels clients in Connecticut on all aspects of cannabis licensing and regulatory matters.
Per the approved guidelines, a business qualifies as a social equity applicant if it is at least 65% owned and controlled by individuals who had an average household income of less than 300% of the state median household income over the three tax years immediately preceding the application.
“If you can show $3 million in the bank, you wouldn’t qualify as social equity,” Bodian said.
Since the $3 million is written into the legalization law, Bodian said, lawmakers in the General Assembly would have to make changes to the language for that fee to go away or be reduced.
There are some nuances in the law.
For example, existing medical cannabis producers that establish two equity joint partnerships can have their $3 million cultivator conversion fee cut in half to $1.5 million.
There are also some less expensive options for people who want to operate smaller cultivator businesses. A license for a social equity micro-cultivator, which can operate a facility between 2,000 square feet and 10,000 square feet, costs $125 to apply, $250 for a provisional license and $500 for a final license.
