Early this morning the Senate approved a bill decriminalizing recreational marijuana for adults age 21 and over and creating the framework for a legal cannabis market in Connecticut. The bill now goes to a closely divided House of Representatives with less than two days before the clock runs out on the current legislative session.
Legislators introduced the final bill late on Saturday, after reaching a deal with the Governor. The final 297-page bill incorporates elements of the Governor's bill (SB 888) and the labor committee bill (HB 6377). It contains compromises on homegrown marijuana and license priority. If passed by the House and signed into law by the Governor, the law would:
- Legalize possession of up to 1.5 ounces of marijuana, and allow another 5 ounces to be kept legally in the home or a locked vehicle, beginning January 1, 2022.
- Permit homegrown marijuana for holders of medical marijuana cards on October 1, 2022 and to others in July 2023.
- Automatically expunge certain marijuana convictions and provide a pathway to expunge others.
- Prohibit employers from taking adverse actions against employees merely for testing positive for cannabis metabolites, absent controlling federal restrictions.
- Prohibit educational institutions from penalizing students merely for testing positive for cannabis metabolites, absent controlling federal restrictions.
- Allow municipalities to prohibit marijuana businesses or ban marijuana delivery within their jurisdictions.
The law also controls licensing of marijuana growers, retailers, and delivery services. Here are some of the key requirements for licenses:
- Half of the initial licenses will be reserved for social equity applicants* who will receive priority in license processing and approval.
- A 15-person Social Equity Council will set rules for social equity applicants and review their applications.
- The state will create two lotteries for licenses, the first only for social equity applicants and the second for all other applicants.
- Applicants must pay a fee to enter the lottery, ranging from $250 to $1,000, depending on the size and type of business.
- Licenses will range in cost from $5,000 to $3 million, depending on the size and type of business, with a 50% discount for social equity applicants and social equity joint ventures.
- Existing medical marijuana dispensaries who seek to convert into hybrid retailers (i.e., those selling both medical and recreational marijuana) must pay a licensing fee of $1 million.
- Applications from dispensary facilities that wish to convert to hybrid retailers will be accepted on or after July 1, 2021.
- All other applications will be accepted no later than 30 days from the date in which the Social Equity Council posts application criteria on its website, which must occur by September 1, 2021.
While the bill makes significant strides towards ensuring equity in the would-be legal cannabis market, existing businesses with market experience and capital will still have the upper hand. In addition, the provision allowing municipalities to ban cannabis businesses may lead to a patchwork of conflicting local regulations, leaving businesses to operate in legal quicksand.
The bill imposes a myriad of requirements on licensing, taxation, and business operations. Stay tuned for an in-depth analysis of those requirements if the bill becomes law.
_____
*A "social equity applicant" means an applicant who
is at least 65% owned and controlled by an individual or
individuals who:
- Had an average household income of less than 300% of the state median household income over the last three tax years; and
- (i) Was a resident of a disproportionately impacted area for at least five of the ten years immediately preceding the date of such application; or (ii) Was a resident of a disproportionately impacted area for not less than nine years prior to attaining the age of eighteen.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.