The Hartford Cannabis Company, which was denied access to grow cannabis, claims in a Hartford Superior Court lawsuit that the state and the Social Equity Council, changed the rules part way through the application process and refused to allow them to amend their application.
Earlier this month 25 operators were disqualified from the status of social equity applicant because they didn’t meet the criteria.
According to the lawsuit, there was no discussion of the rule change at a meeting in April. And what was discussed was “literally illegible,” and only on the screen for two minutes and 10 seconds. The change required social equity applicants to demonstrate that 65% of the ownership of the day-to-day operations were controlled by the social equity applicant.
“There was no debate or discussion by the SEC regarding this change or any update to the online Checklist as to the required evidence concerning the level of control which needed to be submitted by an SEA applicant,” the complaint states.
Earlier this month, some members of the Social Equity Council worried about eight applicants, like Hartford Cannabis Company, 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, at that July 12 meeting, 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.
According to the complaint, “Although Hartford Cannabis was determined to be eligible under the Residency and Income Requirements for SEA status, the SEC determined that Hartford Cannabis was ‘ineligible’ for SEA status under the ‘Ownership Requirement.’”
The Department of Consumer Protection, Department of Economic and Community Development and the Social Equity Council are all named as defendants. They’re represented by Attorney General Willian Tong’s office.
The office declined to comment on the pending litigation.
The Hartford Cannabis Company is asking the court to reverse the decision and reconsider its application.
