Hartford Business Journal

www.HartfordBusiness.com • February 24, 2020 • Hartford Business Journal 17 By Sean Teehan steehan@hartfordbusiness.com G ov. Ned Lamont has filed a bill to legalize recreational marijuana, creating a $1.25-per- gram tax on the drug, which would be available for pur- chase to customers 21 and older be- ginning at the earliest, July 1, 2022. Connecticut is behind the eight ball on legalization as Massachu- setts, Vermont and Maine already allow recreational use of the drug. Still, there will be plenty of busi- ness interests and opportunities at stake if and when the new industry sprouts in Connecticut. From real estate to construction, Lamont's proposal is drawing reac- tions from a variety of Connecticut industries. Here are a few of the issues surrounding legal marijuana and its potential impact on Greater Hartford's business community. Room for growth … and sales When Curaleaf Connecticut Presi- dent Greg Schaan was searching for a location with enough room to house his company's growing medical mari- juana operation he noticed something interesting: many of the vacant spaces he looked at used to be occupied by companies that left the state. "They had left behind these large commercial operations, because businesses had relocated to some- where else," Schaan said. Curaleaf ended up moving into a 60,000-square- foot space in Simsbury that had been a customer-ser- vice center for electric utility Eversource. But Schaan and others think that legalizing recreational marijuana in Connecticut would help fill vacant industrial and retail space. In 2019, vacant retail space in Connecticut increased to 4.1 mil- lion square feet, according to a study published by Massachusetts-based consulting firm Keypoint Partners Inc. That puts the state's retail vacancy rate at 10.8%, a slight increase over the prior year as traditional retailers con- tinue to shrink or go out of business amid competition from online sellers. Luke Massirio, a real estate broker at O,R&L Commercial in Rocky Hill, said he expects Lamont's legalization push to reinvigorate marijuana com- panies' interest in retail space within the state. Last year when a legaliza- tion bill was raised he said he was get- ting calls from out-of-state investors and dispensary operators who were interested in setting up shop here. "I think everybody's just been trying to get ahead of the curve, and unfortunately it just keeps getting delayed," Massirio said of legalization. Of the five or so inquiries Massirio said he received monthly in 2019 from marijuana companies interested in vacant retail space, about 90 percent were from Massachusetts, he said. More marijuana producers could also help fill vacant industrial spaces, Massirio said. Under Connecticut's medical mari- juana program, only four companies (including Curaleaf ) currently grow marijuana in the state. But a legal recreational program would likely ex- pand that, and marijuana production can be housed in industrial spaces no longer usable by manufacturing companies, Massirio said. "We have a lot of outdated indus- trial [facilities]," Massirio said. Many of the vacant industrial buildings in the state were built in the 1960s and '70s, before manu- facturers operated machines that require 18-foot ceilings, so they're too small to use, Massirio said. But that's not a problem for marijuana produc- ers, which don't need high ceilings. Curaleaf's Schaan, whose company invested more than $10 million in ren- ovating its new Simsbury facility, said the overall impact on real estate will depend on how many growers and dispensaries would be allowed under a legalization program, and local com- munities' acceptance or resistance to welcoming the industry. "Any producers' ability is largely going to depend on the local towns and municipalities, and their inter- est in having a cannabis-related business in their town," Schaan said. Liquor industry wants regulatory parity The alcohol industry in some states has raised concerns about losing mar- ket share to the nascent recreational marijuana sector, but lobbyists for liquor producers and package store owners in Connecticut say they are less concerned about that threat. Still, that doesn't mean they are totally disinterested in the issue. For example, the liquor industry wants to see the same types of re- strictions, taxes and oversight they abide by imposed on recreational marijuana sellers and producers. In fact, when recreational marijua- na legalization was being debated in 2018 at the state Capitol, Jay Hibbard, a lobbyist for the Distilled Spirits Council of the United States, submit- ted testimony outlining a broad regu- latory framework for the industry. He advocated for the establishment of marijuana-induced impairment levels and a roadside impairment test, ideas Lamont said he supports. "We think that those standards are acceptable and should be wel- comed by [the marijuana] industry and policymakers alike," Hibbard said in an interview. Hibbard said his organization has tracked the effect marijuana legaliza- tion has had on liquor sales in Califor- nia and Colorado and there doesn't ap- pear to have been much impact so far. "In our particular case it appears that recreational marijuana has not impacted our sales growth," in other states, he said. Carroll Hughes, executive director and lobbyist for the Connecticut Pack- age Stores Association, said his group has decided to stay out of the issue because they don't think it will have a major impact on their businesses. "There are people who love it, and people who hate it," he said. "Why would we want to get involved?" Hazy drug-testing policy The prospect of legalized recre- ational marijuana has some employ- ers worried about the effect it could have on workforce size and drug- testing efficacy. Continued on page 20 >> Reading the Green Leaves Legalized recreational marijuana poses opportunities and threats to various CT business interests PHOTO | HBJ FILE Curaleaf Connecticut President Greg Schaan said the impact legalized recreational marijuana will have on the commercial real estate market will depend on how many dispensaries and growers are allowed under the law. Luke Massirio, Real Estate Broker, O,R&L Commercial

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