Fine Fettle recently opened the state’s first equity joint venture (EJV) adult use cannabis shop, but after yesterday’s decision from the Social Equity Council rescinding five other approvals to Fine Fettle EJVS, the company will have to pump the brakes on expanding its footprint.
“This approval did not comply with the amended provisions of [Connecticut’s adult use cannabis law], regarding the shared ownership provision,” said SEC Chair Paul O. Robertson during the Mar. 7 meeting. “We anticipate that these entities will be submitting applications with a revised ownership structure.”
Aside from the chair’s comments there was no further discussion on the matter before the council unanimously approved the revocation.
The SEC voted during the March 7 full council meeting to revoke five of the six EJV approvals based on the fact that the company had partnered with the same social equity qualifier for all six applications.
“We respectfully disagree with the Social Equity Council’s decision that recent changes to the law required revocation of licenses approved six months ago,” said Fine Fettle COO Benjamin Zachs, after the council’s meeting. “Those approvals reflected substantial expense and effort by a local team of Social Equity Partners and a locally owned operator deeply committed to one another and to the restorative goals of Connecticut’s adult use cannabis program. Reversal of those approvals is difficult and deeply disappointing for our partners and our business. This directly impacts the social equity applicants that this law is meant to help and promote.”
The SEC approved the social equity plan for Fine Fettle’s first EJV a month ago during the February full council meeting, which allowed the company to open a retail operation in Manchester.
During yesterday’s meeting, the council also granted pairs of approvals for EJVS to CT Pharma, Willow Brooks and Caring Natures, before denying five more approvals based on the same ownership limitations that compelled the SEC to rescind its previous Fine Fettle approvals.
The council also voted to approve two workforce development plans based on the recommendations of consulting firm CohnReznick. The council denied a third workforce development plan for falling four points short of the 70-point minimum needed to get recommended by CohnReznick.
Governor Ned Lamont signed a bill in May, 2022 that updated some of the existing cannabis rules, including setting a limit of two on how many EJV a single hybrid medical-adult use retailer can be a part of, while also limiting the social equity applicants from being a part of more than one EJV.
Basically, an existing medical cannabis retailer can partner with social equity applicants as equity joint ventures. The social equity applicant retains a majority ownership of the company, while the parent company brings the financial support.
About three months later, the SEC voted to approve its first six EJV licenses, all of which went to Fine Fettle. Since then, the adult use market launched on Jan. 10, 2023, followed shortly by the opening of Fine Fettle’s first EJV, in Manchester.