MERIDEN — While working on his application for a recreational cannabis dispensary license, Nick Gulino was dismayed to see the number of repeat applicants.
“When I clicked that drop-down (menu) I saw dozens and dozens of repeated applications,” Gulino wrote in an email. “I realized the state has allowed these companies to stock the pond with an unlimited number of entries for the lottery.”
Gulino, a social equity applicant with a provisionally approved location at 28 W. Main St., said allowing duplicate applications hinders new businesses in favor of large, existing Connecticut medical businesses or out of state companies by requiring certain documents a new business wouldn’t necessarily have.
“I cannot fathom how our lawmakers consider this to be fair,” Gulino continued. “Based on how many applications had been submitted (overwhelmingly duplicates), a single application has something like a 0.03% chance of being selected.”
When crafting the adult use cannabis law, the state legislature did not restrict the number of applications a single entity can file. But it did restrict the number or licenses to two in any given category.
The practice allows the state to collect more in fees that are not refundable, as thousands of applicants wait for the first round of provisional approvals.
As of June 9, the state had received 36,414 applications for licenses spread among eight categories. The state’s Social Equity Council is currently sifting through Gulino’s and other applications to determine who moves to the provisional step. Multiplying the number of applications in each category by the license application cost, it is estimated the state has collected $10.5 million in application fees as applicants await the lottery results.
“The lottery applications are currently under review for license types,” according to Kaitlyn Krasselt, communications director for the state Department of Consumer Protection. “The Social Equity lottery, application review and approval process is conducted first for each license type, and must be completed before the general lottery application review and approval can take place for each license type.”
The lottery and application review process will continue over the next several weeks until all provisional licenses have been awarded for both “social equity” and “general” for each license type, Krasselt added. Fewer than 50 are available across all categories, with half going to social equity applicants and half to general applicants. The public will be notified as licenses are granted.
Lottery winners will still have to get a cannabis business up and running. That’s no small feat in a highly regulated industry, especially for start-up entrepreneurs.
“This is a heavy cash-investment business,” Andrea Comer, deputy commissioner of the Department of Consumer Protection, recently told the Connecticut Mirror. “What we don’t want to do is have people set up to fail by saying, ‘OK, you want a license? Here you go.’ And then they’re ill-equipped to build or sustain that business.”
‘One ticket to win’
As of now, the legislature has not set limits on the number of applications a single applicant may submit. According to its website, the Department of Consumer Protection will not award a license to any lottery applicant who has two or more licenses of a given type at the time of the lottery, until June 30, 2025.
Other applicants have complained that the conversion fees for medical producers and retailers limit access to large companies that have millions to spare.
Under the law, the fee to convert is $1 million for retailers and $3 million for producers, which could be cost-prohibitive for many businesses. That rate is discounted for operators who form 50/50 “equity joint venture” partnerships with a person or business that meets certain income or residency criteria.
Ginnie-Rae Clay, director of the Social Equity Council, said she cannot comment on the legislature’s reasoning when it set its rules governing applications.
But the benefit is the process is done by lottery and “it only takes one ticket to win,” Clay stated in an email. “Everyone that enters has a chance at being selected.”
Clay added the work of the Social Equity Council is to encourage and include, not exclude.
“The Council takes its work very seriously and will continue to advocate and work toward helping disproportionately impacted people participate in the adult use cannabis industry in a fair and equitable way,” Clay said.
Waiting game
Once an applicant has been selected through the lottery, licenses are provided in a two-step process.
First, the applicant will receive a provisional license, provided the applicant completes its application within 60 days and pays the necessary fees. The provisional licenses range from $250 to $25,000 and expire 14 months later. During that time, an applicant must apply for a final license by paying the required fee and providing evidence that it has met certain criteria. The fees for final licenses range from $500 for a social equity micro-grower to $75,000 for a cultivator in the general lottery.
Meriden has seen interest in the cannabis industry, particularly in light of sale and cultivation prohibitions in Walllingford and Southington and sale prohibitions in Cheshire. In the city, Willow Brook medical dispensary on East Main Street has received city approval for a hybrid medical/recreational dispensary. The transition will happen on a date set by the state DCP, according to the DCP website.
The city has also approved adult recreational dispensary locations at 28 W. Main St. and at 834 Broad St. A micro-cultivator was also granted city approval for a location at 45 Gracey Ave.
All are awaiting word from the state.
The DCP estimates adult recreational sales to begin at the end of 2022, when it expects to have enough inventory and distribution infrastructure statewide.
Reporter Mary Ellen Godin can be reached at mgodin@record-journal.com.
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