Hartford Business Journal

22 HARTFORDBUSINESS.COM | May 23, 2022 Department of Consumer Protection Commissioner Michelle H. Seagull (right) said it's still possible for recreational marijuana sales to begin this year. Andrea Comer (left) is DCP's deputy commissioner and chair of the Social Equity Council. HBJ PHOTO | STEVE LASCHEVER With cannabis business lottery application windows closing, what's next? By Skyler Frazer sfrazer@hartfordbusiness.com D espite still being early in the licensing process — and having to sort through tens of thousands of applications from prospective cannabis entrepreneurs — retail marijuana sales could still begin by the end of this year, the industry's top regulator said. That's the good news for budding marijuana entrepreneurs eager to enter the state's adult-use market. However, the industry will likely be dominated at the start by dispensaries currently serving medical marijuana patients, since they have easier access to the recreational market, compared to new industry entrants. "That's sort of what we've seen play out in other states — if you have an existing business it's a little easier to expand than to start something new," said state Department of Consumer Protection Commissioner Michelle H. Seagull, who oversees the cannabis industry. Retail cannabis sales in 2022 are still possible, Seagull said in a recent interview, despite the fact that provisional licenses haven't yet been doled out to companies. "A lot of it depends on how long the process goes, but we still think that's a possibility," Seagull said. Prospective cannabis companies not currently operating in Connecticut's medical market must go through a number of steps — and get lucky — to enter the recreational industry. Application windows for the eight different cannabis business license types have been closing weekly since earlier this month. After that, qualified applications will be entered into a lottery where a limited number of provisional licenses will be granted. As of May 12, 26,052 lottery applications were submitted for all eight cannabis business license categories, but only 58 total licenses will be granted during the first lottery round. Meantime, medical marijuana dispensary operators can bypass the lottery and apply for a hybrid license to expand into the adult- use market. They only need state and local zoning approvals to make the transition. "There will be a review of their conversion application," Seagull said of hybrid dispensaries. "For example, they'll need to include their plans to protect the medical market and preserve that so those patients don't hit supply disruptions, and they need to have a workforce development plan." Provisional licensing The next step in the licensing process for new prospective market entrants is the lottery, which will be handled by an independent third- party company. DCP has not yet identified the company it has hired to perform the lottery. There will be separate random drawings for general and social equity license applicants. Social equity applicants that aren't selected for their lottery will automatically be entered into the general lottery. Lottery winners are then vetted by DCP or the Social Equity Council. If they make it through that process, companies will be given a 14-month provisional license to iron out the details of their business. Seagull said the initial application review is very preliminary — making sure candidates don't have disqualifying convictions, for example — but the provisional stage gives companies a chance to finalize their full business plan and get other documents in place. "Once you have that provisional license, you have a little bit more certainty that you're on a path towards the final license," Seagull said. That provisional license window is when companies will finalize their locations, get zoning approval and lock up any financing commitments, said Megan Budd, a Connecticut CPA and principal with accounting and consulting firm Withum. Megan Budd

• Cover