Connecticut lawmakers approved a social-fairness-focused recreational marijuana market on Thursday that is expected to generate more than $700 million in sales within a few years, becoming the fourth state legislature to approve adult-use marijuana in 2021.
Governor Ned Lamont is expected to sign the bill.
The Senate agreed to the House version by a vote of 16 to 11, with nine senators absent on Thursday morning. In approving the House version, the Senate dropped Lamont’s opposition and concurred with the governor’s support for the House measure’s social justice amendment.
The social equity provision targets communities which are most affected by the drug war and aim to bring more minority entrepreneurs into the state’s legal marijuana industry.
The nearly 300-page measure, known as Senate Bill 1201, does not specify when the market will launch, but Lamont had set May 2022 as the start date before. mJBizDaily projects that Connecticut’s adult-use marijuana market will generate $250 million in sales in its first full year and $725 million in the fourth year.
The wave of legalization
Connecticut is the latest in a series of states to legalize recreational marijuana passed the state legislature this year. Others include New York, Virginia, and New Mexico.
Before that, voters in Arizona, Montana, New Jersey, and South Dakota approved recreational marijuana initiatives at the ballot box in November 2020.
But this year in South Dakota, a lower court struck down the adult-use marijuana initiative. The issue is now being decided by the South Dakota Supreme Court. “This year has shown us that the state legislature is up to the challenge of ending marijuana prohibition,” Karen O’Keefe, state policy director for the Marijuana Policy Project, said in a statement on Wednesday evening.
“Most Americans have made it clear that they support legalization and a regulatory regime over the status quo.
“This victory will increase momentum for marijuana policy reform in other states and at the federal level.”
Connecticut also mirrors the ripple effect of legalization on the East Coast. In addition to the newly legalized recreational marijuana states on the East Coast, markets are operating in Massachusetts and Maine.
In a statement, Lamont noted that by legalizing adult use, “we are keeping Connecticut economically competitive with our neighbors.”
Delaware and Rhode Island are also considering legalizing adult use, and Maryland is expected to pass a measure as soon as next year.
Focus on Social Equity
Connecticut’s social equity provisions include a requirement that 50 percent of applications be reserved for social equity applicants.
According to a summary of the Marijuana Policy Project bill, most new licenses would be issued through a lottery, providing more equal opportunities for those who qualify.
Existing medical marijuana growers could apply for adult-use licenses as early as this summer for a $3 million fee or, if they create at least two social equity joint ventures, for only $1.5 million, as the MPP bill summary famously states.
Connecticut launched its medical marijuana marketplace in September 2014, with four MMJ producers and 18 dispensaries. Many are homegrown, but several multinational operators, including Illinois-based Green Thumb Industries and Florida-based Trulieve, have spent tens of millions of dollars in the past two years to enter Connecticut’s MMJ market.
Massachusetts-based MSO Curaleaf, which began wholesaling MMJ in October 2014, is the largest player, holding one of four manufacturer licenses and four of 18 pharmacy licenses following additional acquisitions in 2020.
Connecticut Act Details
Under the adult-use measure, potential recreational marijuana operators would be required to make a “good faith effort” to reach a labor peace agreement with a union before receiving a final license.
Here are some of the other key operational elements of the measure.
(1) Local jurisdictions may prohibit retail sales through zoning laws, but residents may request a local referendum to approve adult-use stores.
(2) Municipalities would be limited to one marijuana retailer and one micro grower for every 25,000 residents until July 1, 2024.
(3) Municipalities that allow recreational marijuana sales will be subject to a 3% sales tax.
(4) Product sales will also be subject to a 6.35% state sales tax, plus
0.625 cents per milligram of total THC of plant material.
2.75 cents per milligram of total THC for edible use.
0.9 cents per milligram of total THC for other cannabis products.