A state panel approved Tuesday the first batch of applicants seeking to open cannabis cultivation businesses in Connecticut as social equity business owners, given special consideration as members of communities negatively impacted by the war on drugs.
The Social Equity Council approved 16 applicants during a remote meeting and disqualified 25 others as failing to meet criteria outlined in a 2021 law which legalized the recreational sale of cannabis. The applicants will still need approval from the Consumer Protection Department before receiving a license to open a business.
“Today is a day of significant importance for this council,” Andrea Comer, deputy DCP commissioner who chairs the council, said. “Our actions today will be transformative for social equity applicants but important, we will bring change to communities most harmed by the war on drugs through employment and community reinvestment.”
In an effort to assist communities harmed by years of government drug enforcement policies, the law requires that half of business licenses in the newly created industry go to applicants who live in disproportionately impacted communities.
Based on recommendations by the consultant firm Cohn Reznick, the panel approved two applicants from Bridgeport, five from Hartford, one from Manchester, one from Middletown, three from New Britain, one from Southington, one from Stamford and two from Waterbury.
Although the applicants must live in impacted communities, they are not required to open their initial businesses there. The council did not specify on Tuesday the names of the applicants but said approved businesses would be contacted by the state.
While the panel approved the successful applicants without controversy, it struggled at length before voting to deny 25 others.
“We recognize this will be a life-changing decision for those approved applicants. We also know that those who are not approved will be profoundly disappointed,” Comer said, “particularly because this was a one-time opportunity.”
Specifically, some members worried about eight applicants who were denied based solely on their failure to satisfy a provision applying to joint ventures. The law allows applicants to obtain financial backing from other entities so long as the social equity applicant maintains 65% ownership and control of the business.
Some members of the panel feared the provision was somewhat ambiguous and could result in qualified candidates being rejected due poorly articulated applications.
“Everything in history tells us when there’s gray areas it often does not end in the best interest of communities for communities of color,” Subira Gordon, a member of the panel, said, adding that applicants were not given the opportunity to clarify their responses. “It doesn’t sit right with me, I’m going to be 100% honest.”
Gordon and another council member, Corrie Betts, voted against denying the eight applicants.
“I don’t think it’s fair that we should be voting where there’s any ambiguity, where it’s not clear,” Betts said. “Not when this is people’s livelihood, not when we’re talking about making sure we’re helping those that have been affected by the war on drugs. Who’s to say that this right here isn’t one of those individuals.”
Other members argued the provision existed to prevent big financial backers from using social equity applicants as a front to acquire a business license while intending to control the operation themselves.
“I think that’s the concern for the entire community,” Michael Jefferson, a member of the council, said. “Who’s actually running the store? Who’s actually operating these establishments? We established the criteria and [Cohn Reznick] followed the criteria and that’s where we land. It’s not going to make folks happy but these are the folks we gave the task to.”
David Lehman, state economic and community development commissioner, agreed.
“I share the concerns that Councilman Jefferson just made in terms of folks potentially taking advantage of social equity applicants in the construct of these businesses and how control and ownership works,” Lehman said.
Comer said that applicants denied by the council were free to appeal the decision to the state Superior Court.
In a statement, Adam Wood, president of the CT Cannabis Chamber of Commerce, said the approval of the 16 cultivators as social equity applicants would help generate millions in income and create good paying jobs.
“The vote will also bring needed economic development, opportunity, and tax-base growth in some of our state’s most disproportionately impacted communities in cities such as Bridgeport, Hartford, and New Haven,” Woord said. “We look forward to learning more about those applications in question, based on ownership and control, and seeking further clarification of some of the ambiguities in the existing legislation.”