Connecticut to become 18th state to legalize recreational cannabis | Goodwin


On June 17, 2021, the Connecticut General Assembly voted to approve the Act Respecting the Responsible and Fair Regulation of Adult Cannabis Use (the “Act”). With Governor Ned Lamont’s signature expected today, Connecticut will become the 18th US state – and the fourth state this year – to legalize the recreational use of cannabis by people 21 and older.

Under the new planned law, as of July 1, 20211That is, almost immediately, all adults 21 and over will be allowed to possess up to one and a half ounces of cannabis. Personal cultivation rights will be available to medical marijuana patients as of October 1, 2021 and later to adult consumers on July 1, 2023. Like the state’s existing medical marijuana program, the Commissioner and Department of Protection consumers (respectively, the “Commissioner” and the “Ministry”) will enact rules to implement the Law and regulate the new cannabis retail market. The law provides for limits yet to be determined on the number of producers and dispensaries cannabis for recreational use, as well as limits on the number of applications to be considered for related licenses. The law also establishes a tax structure that includes the general state sales tax rate of 6.25%, excise duties ranging from 0.625% to 2.75% per milligram of total THC and a 3% tax on gross sales receipts. In addition to legalizing recreational use and wind e cannabis, the law contains a number of social equity initiatives and criminal justice reforms for the benefit of individuals and communities in the state who have historically been affected by state prosecutions for criminal offenses. cannabis-related crimes.

THE NEW REGULATORY FRAMEWORK

The law directs the commissioner and department to develop, administer and regulate the state’s new legalized adult cannabis program. Under the Act, the Commissioner must publish interim policies and procedures regarding, among other things, dosage parameters, portion size limits, product packaging and labeling requirements, and analytical standards. in laboratory. The commissioner will also set the maximum number of dispensaries and producers that can be licensed in the state. As the adult program grows, the commissioner will consult with other state agencies to promulgate rules, create support programs such as a business acceleration program and a training program. workforce, and recommend legislation for related services, including banking, mental health and insurance.

Licence

The law categorizes licenses as follows: (1) cannabis establishment licenses, (2) key employee licenses, (3) support licenses, and (4) laboratory or research program licenses. Cannabis establishment licenses further include the following types: retailer, hybrid retailer, grower, micro-grower, product manufacturer, food and beverage manufacturer, product packager, delivery service, and transporter. For more information on license types and associated fees, see the table below.2

For each type of license, the Ministry will establish not only the maximum number of licenses to be issued, but also the maximum number of applications to be considered. Half of the maximum number of applications to be considered will be reserved for “social equity applicants” and selected through a social equity lottery. “Social equity claimants” are defined under the Act as claimants who are at least 65% owned and controlled by a person who (i) had an average household income less than 300% of the median household income state during the three years preceding such a request, and (ii) has been a resident of a disproportionately affected area for at least five of the ten years preceding the request or has been a resident of a disproportionately affected area disproportionate for at least nine years before reaching the age of 18.

If the Department receives more applications for any type of license than the maximum number to consider, a lottery will be organized to identify exam requests, although half of the exam slots are reserved for social equity applicants. The examination of applications and the granting of licenses will not begin until the Department has promulgated the rules and regulations necessary for the implementation of the Law.

Candidates without social equity3 shall pay a fee for the issuance or renewal of all licenses and registrations in accordance with the following table:

License type License defined License fees
Retailer license
  • Permitted to buy cannabis from producers and sell cannabis to retail customers (but not to other retailers)
  • Application fees: $ 500
  • To receive a provisional license: $ 5,000
  • To receive a final license: $ 25,000
  • To renew a definitive license: $ 25,000
Hybrid Reseller License
  • License to buy and sell cannabis and marijuana products for medical purposes
  • Application fees: $ 500
  • To receive a provisional license: $ 5,000
  • To receive a final license: $ 25,000
  • To renew a definitive license: $ 25,000
Farmer’s license
  • Permitted to engage in the cultivation, cultivation and propagation of the cannabis plant in an establishment of at least fifteen thousand square feet of grow space
  • Application fee: $ 1,000
  • To receive a provisional license: $ 25,000
  • To receive a final license: $ 75,000
  • To renew a definitive license: $ 75,000
Micro-Cultivator License
  • Permitted to cultivate, cultivate and propagate the cannabis plant in an establishment of at least two thousand square feet and not more than ten thousand square feet of grow space
  • Application fee: $ 250
  • To receive a provisional license: $ 500
  • To receive a final license: $ 1,000
  • To renew a definitive license: $ 1,000
Product Manufacturer License
  • License to obtain cannabis, extract and manufacture products exclusive to this type of license
  • Application fee: $ 750
  • To receive a provisional license: $ 5,000
  • To receive a final license: $ 25,000
  • To renew a definitive license: $ 25,000
Food and Beverage Manufacturer License
  • License to own and operate a business that acquires cannabis and creates food and beverages
  • Application fee: $ 250
  • To receive a provisional license: $ 1,000
  • To receive a final license: $ 5,000
  • To renew a definitive license: $ 5,000
Product Packager License
  • License to package and label cannabis
  • Application fees: $ 500
  • To receive a provisional license: $ 5,000
  • To receive a final license: $ 25,000
  • To renew a definitive license: $ 25,000
Delivery service or carrier license
  • Permits to deliver cannabis from retailers to eligible individuals
  • Application fee: $ 250
  • To receive a provisional license: $ 1,000
  • To receive a final license: $ 5,000
  • To renew a definitive license: $ 5,000
Support license
  • Permit to hold a direct or indirect financial interest in a cannabis establishment
  • To receive an initial or renewed license: $ 100
Key employee license
  • Permit to hold a management position or equivalent title, in particular: President or CEO, CFO or compliance officer
  • To receive an initial or renewed license: $ 100
Employee registration
  • Registration to be employed by a cannabis establishment, including general employees, board members and access holders such as independent contractors
  • To receive an initial registration or annual renewal: $ 50
License conversion
  • To go from a medical dispensary to a hybrid retailer: $ 1,000,000
  • For a producer to expand medical cannabis cultivation only to adult recreational cannabis: $ 3,000,0004

TAXATION

The state general sales tax of 6.25% will apply to the sale of cannabis, in addition to excise taxes ranging from 0.625% to 2.75% per milligram of total THC and a tax of 3% on gross sales receipts. Excise taxes will not apply: (i) to the sale of cannabis for palliative purposes; (ii) the transfer of cannabis from one license holder to another license holder; and (iii) the sale of cannabis by a delivery service to a consumer.

All cannabis tax revenues will be deposited into the General State Fund for fiscal years 2022 and 2023. Subsequently, the vast majority of cannabis tax revenues – around 85% to 100% – will be distributed among a ” Social equity and innovation fund ”. and a “Prevention and Recovery Services Fund”. The law also authorizes municipalities to tax the sales of cannabis in their territory, the tax revenues to be used for street improvement, education programs, services to people released from probation or parole, services of mental health, youth services or civic engagement.

SOCIAL EQUITY PROGRAM AND CRIMINAL JUSTICE REFORM

As noted above, the Act establishes a strong social equity agenda designed to support individuals and communities who have been disproportionately harmed by the criminalization of cannabis. In addition to social equity contenders with better opportunities to enter the state’s retail cannabis market and reduced licensing fees, the law establishes a social equity council and contemplates various program initiatives, including business acceleration programs, workforce training and development, and Equity Candidate and Bachelor programs. Program initiatives will be funded by cannabis tax revenues deposited in the Social Equity and Innovation Fund.

The law also introduces a number of criminal justice reforms to de-stigmatize cannabis, address the effects of historical discrimination in the application of cannabis, and ensure economic opportunities for families affected by the criminalization of cannabis. These reforms include the expungement of some cannabis-related convictions, law enforcement reforms, the decriminalization of cannabis possession for minors and young adults under the age of 21, and a number of other changes. to existing criminal law.

1 The effective dates for all provisions of the Act vary and may be linked to additional action by state regulators.
2 The Act does not provide additional details for laboratory or research program licenses. Nonetheless, a “laboratory” is defined as a facility located in the state that is licensed to research and analyze the effects of cannabis use. A “research program” means a program designed to study cannabis with the aim of increasing the available information regarding the growth, processing, medical attributes, dosage forms, administration or use of marijuana to treat. or relieve the symptoms of any medical condition or the effects of such symptoms.
3 Social Equity applicants are eligible for a 50% reduction in license fees for the initial application and for the first three cycles of renewal.
4 A producer seeking to expand their cultivation may be eligible for a reduced rate of $ 1,500,000 if they participate in two or more joint ventures.

Katherine Thill contributed to this alert.

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