Marijuana law expert: CT’s equity rules could be nation’s best

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Connecticut officials studied laws and outcomes from around the country to arrive at what marijuana advocates are calling a new national standard for the adult use of cannabis.

When Gov. Ned Lamont signs the bill this week to join the 18 other states and the District of Columbia that legalized recreational marijuana, provisions to provide opportunities for inner-city neighborhoods that were decadeslong targets in the failed war on drugs could be the best in the nation.

“One of the advantages of not being first is seeing what other states have done and tweaking it,” said Senate President Pro Tempore Martin Looney, D-New Haven, who along with Sen. Gary Winfield, also D-New Haven, led the successful third and final legislative vote on the bill Thursday.

Connecticut’s extensive rules focusing on Black and brown communities would be groundbreaking in scope, said Karen O’Keefe, director of state policies for the Marijuana Policy Project, an advocacy group.

“I am incredibly encouraged and proud,” she said in a recent phone interview. “Diversity and equity have come a very long way.”

With half of new licenses for cannabis businesses aimed at “social equity,” applicants, Connecticut would easily exceed other states in racial and economic set-asides, and a license lottery would take away the taint of local political connections that have delayed early attempts at equity in the Massachusetts adult-use market. O’Keefe also likes Connecticut's three-tiered licensing system, as well as the phase-in of allowing recreational homegrowers by July 1, 2023.

Connecticut’s social-equity program, based on targeted neighborhoods with low incomes and disproportionate criminal cases between 1982 and the end of 2020, should help make businesses successful, O’Keefe said.

One of the keys to the program will let the four growers of the state’s medical marijuana program, through the state Department of Consumer Protection, expand their licenses to enter the adult-use market. But they would be required to either pay $500,000 million to the governing Social Equity Council, or go into contract with a social equity partner from an impacted census tract, to let the new licensees operate five percent of their existing growing space for their own new business.

New cultivators under social equity provisions would not have to participate in planned license lotteries, but would have to pay $3 million and site their growing facilities within a low-income neighborhood affected by the war on drugs.

The Social Equity Council would also develop and provide technical assistance for new business owners, as well as a new training program for jobs in the industry. In addition, two new funds would be created for supporting the new businesses. Also, 40 percent angel investor tax credits would be offered to those who help social-equity applicants.

Fifty million dollars in state borrowing would also be available to help social equity applicants get started in the capital-dependent business, and to train workers.

“I would say that Connecticut’s legalization bill is poised to be one of the strongest and possibly the strongest equity-and-comparative justice legislation,” O’Keefe said, stressing the accompanying broad justice reforms that would erase criminal records for people with lower-level possession convictions. “There will also be start-up funds so inclusion and ownership in business can truly be successful.”

She pointed out that New York’s recent approval of adult-use legislation did not flesh out details of its equity program. And while adult-use cannabis was approved in Massachusetts in a statewide 2016 referendum, and sales began two years later, equity licenses have only recently been awarded for under-served neighborhoods. The slow rollout hurt people who paid leases on properties in anticipation of winning licenses.

Last week, Vermont Gov. Phil Scott signed a bill that would create a retail industry after the original law allowed for only homegrown cannabis for the three previous years. But equity rules for adult sales in Vermont will be developed in the future.

The Marijuana Policy Project recently reported that since 2014, legalized retail, non-medical marijuana has generated $7.9 billion in tax revenue, including $2.7 billion in 2020. And while direct equity participation in the cannabis was late in arriving, particularly in early adoption states such as California, many states are using revenues in a variety of ways.

Alaska used half its cannabis revenue to support reentry and recidivism reduction for incarcerated people. California has distributed more than $100 million to nonprofit groups that help neighborhoods that were targets of the drug wars.

Washington state funnels six-tenths of every cannabis tax dollar into public health measures, including a health insurance fund for low-income families, the Marijuana Policy Project reported.

Twenty percent of revenue in Illinois is invested in mental health services, and 25 percent goes to under-served communities.

Connecticut officials estimate that if adult-use sales can begin by next next spring, more than $4 million in tax revenue could be generated by June 30, 2022. The second year would produce $26.3 million in taxes, and by the end of the budget year on June 30, 2026, the industry would generate $73.4 million in direct receipts for the state. A social equity and innovation fund would get an estimated $26 million of the revenue by June 30, 2026. Other revenue would go to the Department of Mental Health and Addiction Services and the General Fund.

“We want to built wealth in communities of color,” she said, stressing that very little in upfront payments have to be made, unlike states where big money was required to apply, without any assurances that equity candidates would win licenses. “Hopefully, Connecticut will have a quicker rollout,” she said.

kdixon@ctpost.com Twitter: @KenDixonCT