Issue link: https://nebusinessmedia.uberflip.com/i/1427549
5 HARTFORDBUSINESS.COM | NOVEMBER 15, 2021 Startups, Innovation & Technology By Sean Teehan steehan@hartfordbusiness.com A s Hartford tries to breathe new life into its long- moribund downtown retail scene, Tiana Hercules is scoping out possible locations in the neighborhood for a new venture she's trying to launch: Lady Jane, an adult-use cannabis dispensary. "I want it to be a luxury destination that not only carries top-of-the-line cannabis products, but really is a space to bring people together around education, cannabis and promoting conscious consumption," Hercules said. Hercules, a criminal defense attorney at Hartford-based The Stills Law Firm, recently completed a startup accelerator program with Hartford nonprofit reSET, which works with local socially-conscious startups in its Parkville office. After spending about 10 weeks honing her business model and plan, Hercules said she is taking meetings with prospective investors. If she clears the myriad complicated hurdles of obtaining a state license, finding a downtown Hartford location amenable to a cannabis dispensary and securing capital to start the business, Hercules said she wants Lady Jane to serve not just as a retail outlet, but a community center. Startup marijuana retailer Lady Jane wants to open 'luxury destination' in downtown Hartford Curaleaf executive talks cannabis industry challenges By Sean Teehan steehan@hartfordbusiness.com The cannabis industry is an exciting business filled with interesting people, Curaleaf executive Patrik Jonsson said, but it's also extremely difficult and unforgiving. "I wake up every morning knowing I'm getting slapped in the face," Jonsson said, quoting a business partner. "I don't know by who, and I don't know when, but I know I'm getting slapped in the face." Speaking at a Nov. 3 event hosted by the Hartford Business Journal in Farmington, Jonsson, Curaleaf's regional president for the Northeast region, talked to an approximately 150-person audience, including people interested in entering the state's recreational marijuana market. He was joined by Shipman & Goodwin lead cannabis group attorney Sarah Westby, who said those starting a marijuana business today can find some banking opportunities and private investors, but they should consider segments of the industry with less overhead and complications than production. It's well-known that access to financial services is an obstacle for cannabis businesses because the substance remains federally illegal; banks regulated by the Federal Deposit Insurance Corp. (FDIC) are forbidden from working with marijuana companies. Jonsson said this issue was especially acute a few years ago when he was starting a grow operation in Massachusetts. "When we first started, we got an account with Bank of America, it took us probably about two months, and that account got shut down, and they held our money for quite a while," Jonsson said. "Two years after that, my personal bank account with Citizens Bank … got shut down because I got paid by Curaleaf." Westby, who represents a growing list of clients in the cannabis industry, cited the risk financial institutions take in banking marijuana companies. On the other hand, credit unions are overseen by the National Credit Union Administration (NCUA), which released guidelines in 2019 allowing the industry to provide services and even lend to legally-operating cannabis companies. But credit unions that serve the industry have stringent reporting requirements that create some risks. Providing services to cannabis companies used to be a third rail for financial institutions, Westby said, but that's starting to change. "My firm does work with one bank in Connecticut that is willing to take on cannabis clients," said Westby. "There are slowly but surely some players in the finance industry who see the opportunity and are willing to take on the risk." Finding real estate can also be a difficult process, Jonsson said, noting that some landlords with bank mortgages are restricted from leasing to companies that make or sell a federally illegal drug. Meantime, some municipalities have permanently or temporarily banned the industry. Lawyer Sarah Westby (left) and Curaleaf's Patrik Jonsson. HBJ PHOTO | STEVE LASCHEVER The store would host events that offer guests marijuana-infused meals, celebrate cannabis culture, and provide education about the plant to people whose knowledge of it comes from DARE-era scare tactics. Further, she thinks it's important for Black people — especially women — to establish a place in the legal cannabis industry early on. "If you look at the history of cannabis and how it was criminalized … I just think it's incredibly important for women and men of color not to get left behind," Hercules said. "I think we certainly need to be at the table when it comes to this industry." Hercules said she is looking to raise at least $500,000 by early 2022. She said she will need about $1.5 million from investors to lease and build out a store, pay all license fees, hire a staff of about five employees and source enough inventory to last about 10 months. Her goal is to generate about $100,000 in monthly revenue within a year of opening. Downtown Hartford makes sense as a location because the city's Planning and Zoning Commission recently created a draft zoning matrix that would allow retail sales in the center city. Social equity opportunity A homeowner in Hartford for nearly a decade, and a New London native, Hercules said she is eligible for social equity status, and intends to apply for a license through the social equity cannabis business lottery. Connecticut's legalization statute says 50% of cannabis companies must qualify as social equity businesses, which must be majority owned by someone who grew up in, or lived in for at least five years, areas that were disproportionately affected by the 50-year war on drugs. These applicants enjoy advantages like reduced fees and preferential spots in lottery drawings for cannabis licenses. The Social Equity Council has already determined that disproportionately-affected areas include parts of Hartford, East Hartford, Bloomfield and Manchester. It also includes parts of New Haven, West Haven, Bridgeport, Stratford, Stamford, Norwalk, South Norwalk and Waterbury. Combined, the geographies represent 22.8% of the state's population, and 66.7% of the historical drug convictions. The social equity lottery will likely include a smaller pool of applicants, which increases the chance of success. And applicants not selected in the social equity pool will get another chance in the general lottery process. Hercules said she is also open to partnering with other entrepreneurs, and would consider collaborating with a larger cannabis company on an "equity joint venture." Under the law, medical marijuana growers and dispensaries that enter into such ventures pay half the fee to convert their license to serve the adult-use market, and social equity applicants that partner with them get access to capital and other resources larger businesses can provide. However, any such deal would have to include leaving her in control of the company's direction and vision, she said. "I'm open to any type of partnership that allows me to ultimately achieve my goal, which is to serve Black and Brown people in my community, to hire Black and Brown people in my community, to invest in my community, and to elevate cannabis as a healthy alternative for wellness," Hercules said. Tiana Hercules wants to open a luxury cannabis dispensary in the Capital City. HBJ PHOTO | SEAN TEEHAN