The Connecticut Social Equity Council reversed its decisions to deny seven companies applying for licenses involvement in the state’s cannabis industry. The cannabis companies will be allowed to resubmit their applications to clarify who owns and controls their businesses.
The reconsiderations approved Monday were made amid a consolidated lawsuit of 11 denied applicants — at least two of which will be given a chance to resubmit their application.
The council reconsidered those applications “without admitting that the council erred in denying the license[s] or otherwise failed to follow appropriate procedures,” said Governance Committee Chair Ojala Naeem.
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The seven applicants will be able to resubmit “updated applications only as to ownership and control” within 10 days of the council notifying the applicants of the reconsideration. Then, the council will have another 30 days after the notification to vote on the resubmitted applications using a new definition of ownership and control, approved at their meeting on Monday.
This new definition means that an owner “exercises operational authority over daily affairs of the business, has the voting power to direct the management agents and policies and receives the beneficial interests of the business.” Social equity partners are residents of communities disproportionately impacted by drug conviction and high unemployment rates.
The council reconsidered an application from its July 29 meeting, three from its Aug. 19 meeting and three from its Sept. 7 meeting.
The council also approved eight new license applications after receiving recommendations from its third-party consultant, CohnReznick. The consultant has been tasked with helping the council navigate the complex licensing requirements set up by the state to operate in its new legal cannabis market.
For example, the council approved four equity joint venture retailer license applications — which is usually a social equity applicant who partners with a larger corporate funder — and a lottery product packager license application. The council denied two equity joint venture hybrid retailer license applications and a lottery hybrid retailer license application.
The council based all of the license application decisions on this new ownership and control criteria for social equity applicants. The lottery hybrid retailer license application was denied based on residency requirements.
Naeem said the council will be focusing reconsiderations on the new ownership and control criteria. These requirements could change as the state’s cannabis market grows or due to legal challenges, according to Ginne-Rae Clay, the council’s interim executive director.
“We could conceivably [reconsider an application based on income and residency] if that is the legal advice that is provided to us,” Clay said.
Even after applicants are approved, they must meet the council’s workforce development standards for “providing employment and training opportunities for individuals in disproportionately impacted areas.” During its meeting, the council approved all nine of CohnReznick’s recommendations for these companies, “which all met or exceeded expectations on average,” according to Sarona Saadeh, a senior manager at the firm.
The council also discussed a preliminary budget increase for the 2024 and 2025 fiscal years, though approval of the budget was tabled for a future meeting.
In 2022, the council had $2.8 million for its first budget. The proposal for 2024 is four times the expected 2023 budget, which is about $5.6 million, due to new hires and salary increases.
This story was originally published Sept. 26, 2022, by WSHU Public Radio.