Slow Rollout of Connecticut’s Adult-Use Cannabis Program Starting to Spook Entrepreneurs

December 9, 2023 · Green Market Report

Only 10 adult-use cannabis businesses are operational or nearing operation in the state.

Optimism in Connecticut is beginning to fade as the industry faces a slow and challenging rollout, with only a fraction of licensed businesses fully operational.

As of Nov. 1, the state’s online licensing database showed that 55 cannabis companies are waiting for licenses. Forty have received provisional licenses, according to the Hartford Courier.

However, only 10 businesses – seven dispensaries, two growers, and a delivery service – are operational or nearing operation.

Experts point to a multitude of hurdles contributing to the sluggish start of the industry.

“In a normal business in a free capital market, you’re going to see businesses close unfortunately, or get 50% of the way there and say ‘nope, not for us,’” Drew Richards, a CPA at accounting and consulting firm Marcum, told the outlet.

The Hurdles

The challenges include stringent regulatory processes, limited capital availability, scarce real estate options, and the broader economic climate.

Several factors have caused many prospective business owners currently in the licensing pipeline to reconsider or abandon their plans. These challenges include:

  • Stringent regulatory processes
  • Limited available capital
  • Scarce real estate options
  • The broader economic climate

Access to capital remains one of the biggest barriers, especially for startups that are not allied with larger, multistate cannabis companies.

“When you’ve got somebody who’s linked up as an (equity joint venture) with another company … they’re getting up and running a lot quicker because they’ve got capital behind them,” Megan Budd, a CPA and principal with Withum told the outlet.

To address those funding woes, the state’s Social Equity Council introduced the Canna-Business Revolving Loan Fund with an initial $10 million allocation, aimed at providing low-interest loans to licensed social equity cannabis business owners.

Still, a spokesperson with the Social Equity Council told the Hartford Courier that the agency had yet to issue any loans as of November. The ongoing financial challenges led lenders and tax advisors in the state to predict a slew of companies entering receivership soon, according to CT Insider.

Another major obstacle is the real estate market. Municipalities having the authority to restrict or ban cannabis businesses, so finding suitable locations can be a daunting task.

Nicholas Morizio, a commercial real estate broker with Colliers International, said the challenge of securing properties that meet the specific needs of cannabis businesses is compounded by rising costs in the real estate market.

The licensing process itself, managed by the state Department of Consumer Protection, is also part of the equation. While some businesses have up to two years to get fully licensed, the process has been complex and slow-moving.

“Complying with the state’s requirements to actually get up and running is difficult, it’s costly, and they’ve been given a limited amount of time to do it,” Attorney Ian Butler from Glastonbury-based law firm Brown Paindiris and Scott LLP told Hartford Courier.

Despite the challenges, the industry’s potential remains high. Experts and state officials anticipate growth and stabilization as the market matures and businesses navigate the initial hurdles.

A local Hartford councilwoman and adult-use licensee, Tiana Hercules, recently told Green Market Report that her business plans have spent a bit of time in this limbo.

“I mean, we’re kind of keeping our eyes on our own paper, trying to move forward and trying to be one of the first of this new kind of class of growers to market, so I think we’re positioned to do so,” she said. “But as you know, there are lots of crazy things that can happen in this industry. So yeah, we’re just chugging along on the path we set forth.” (Full Story)

In category:Legalization
Next Post

South Dakota Attorney General Releases Final Ballot Explanation For Marijuana Legalization Initiative

A prospective ballot measure that would legalize adult-use marijuana in South Dakota and allow medical dispensaries to serve anyone 21 and older received a final ballot explanation from the state’s attorney general on Thursday—but the chief backer of the proposal…
Read
Previous Post

Colorado Governor Says Marijuana Prohibition Created A ‘Chicken And The Egg’ Research Dilemma That’s Blocked Federal Reform

The governor of Colorado says that while marijuana reform is “not really a partisan issue” anymore, there are still “stodgy nanny state Republicans who want to control it.” Meanwhile, he says, ongoing prohibition has inhibited research into the science of…
Read
Random Post

State attorneys general urge DEA to reschedule marijuana

The Biden administration’s push to move marijuana to Schedule 3 of the Controlled Substances Act now has the support of 12 state attorneys general. The AGs, all of whom represent states with legal adult-use and/or medical marijuana markets, sent a letter…
Read
Random Post

Florida Governor Signs Medical Marijuana Bill Despite Opposition to Federal Reform

Provisions under the new law could more than double the number of licensees in the state. In the span of just four days, Florida Gov. Ron DeSantis both nixed the possibility of federal marijuana decriminalization if he wins the U.S. presidency and…
Read
Random Post

Japan Slowly Ripping the Cannabis Band-Aid Off - Cannabis Medicines Now Okay, Smoke Weed for Fun and Go to Jail for 7 Years

On December 6, a majority vote in the Upper House approved a revision to the Cannabis Control Law. This revision lifts the ban on pharmaceuticals derived from the marijuana plant while simultaneously introducing a new criminal offense related to marijuana use. Previously,…
Read
Random Post

New Mexico Governor Signs Marijuana Expungements Processing Bill To Build On Legalization Law

The governor of New Mexico has approved a bill to fulfill a key goal of the state’s marijuana legalization law by facilitating automatic expungements for prior cannabis convictions. Gov. Michelle Lujan Grisham (D) signed the legislation from Reps. Andrea Romero…
Read