Hartford Business Journal

HARTFORDBUSINESS.COM | JUNE 26, 2023 19 THE BUSINESS OF CANNABIS C O N N E C T I C U T C O N F E R E N C E PLATINUM SPONSOR SPECIALTY SPONSORS EVENT PARTNER 1:30 — 2:15 PM M&A: BUYING, SELLING OR TRANSFERRING OWNERSHIP IN A CANNABIS BUSINESS 2:15 — 2:45 PM AFTERNOON BREAK 2:45 — 3:30 PM OPPORTUNITIES IN "NON-PLANT'" TOUCHING BUSINESSES: WHAT DOES THE MARKET LOOK LIKE FOR RETAIL AND WHOLESALE SUPPLIERS? 3:30— 4:00 PM CLOSING REMARKS Moderator SARAH WESTBY Partner Shipman & Goodwin LLP Speaker CONNIE DEBOEVER Partner Merida Capital Holdings Moderator PATRIK JONSSON CEO The Higher Collective Speaker JACK COCHRAN Owner/Operator Green Coach Delivery CONFERENCE AGENDA CONTINUED THANK YOU TO ALL OF OUR SPONSORS Topics • Social Equity Restriction • Opportunity for Investors adult-use cannabis sales, according to data from the state Department of Revenue Services. That's a far cry from the $20.4 million in tax revenue the Office of Fiscal Analysis projected would be generated during the first year of recreational sales. Since the adult-use market debuted on Jan. 10, through May 31, recre- ational sales totaled $43.4 million. Sarah Westby, a partner at law firm Shipman & Goodwin and chair of its cannabis practice, said it's hard to predict how much of the market online delivery sales will make up, but she agreed it will likely be a popular service. "I think if we've learned anything from the pandemic, it's that everyone likes the convenience of door-to-door delivery, and we're all willing to pay a premium for that," Westby said. Westby said 11 provisional licenses have been issued to companies looking to establish delivery services in Connecticut. Green Coach is the only one to become operational with a full license. These companies will compete for customers, and Westby said their geographical location and delivery area range could be keys to their success. There is a high concentra- tion of companies with addresses in Hartford and New Haven counties, but fewer players are eyeing some Sarah A. Westby CT RECREATIONAL CANNABIS MARKET STATS (Jan. 10, 2023 — May 31, 2023) Retail sales Products sold Average product price $43,438,112.03 1,069,551 $38.85* *As of week of May 31. Source: CT Dept. of Consumer Protection of the more rural corners of the state, Westby said. "A lot of it depends on how many retail stores open up and where they're located, and how many delivery businesses are up and running to work with them," Westby said. "If you're delivering to Torrington from a store that's in Norwalk, that's probably not going to be a feasible delivery range." While the amount of capital needed to start a delivery service company is much less than what's needed for other cannabis businesses, like retailers and cultivators, Westby said the margins are also thinner, and the market opportunity is less clear. Tremendous upside Ward, a former member of Hartford Mayor Luke Bronin's administration, was a major player in pushing state lawmakers to legalize recreational cannabis. But his entrance into the delivery service market was partly luck. He said his 70-year-old uncle, Guy Clements, approached him about pursuing a delivery license, but he only submitted one general lottery applica- tion, which cost $250. Overall, there were nearly 1,200 applications filed in the delivery service lotteries vying for just five general and five social equity licenses. "I know other cannabis entrepre- neurs who submitted multiple slots to try to win one of the delivery licenses. I submitted one and didn't think anything of it," Ward said of his unlikely lottery win. "I didn't originally have plans to operate a cannabis delivery business. I'm a lawyer and a lobbyist." After spending the past six-plus months learning the ins and outs of delivery service operations, Ward said his company, CannaCart, expects to be fully licensed and operational by Labor Day weekend. He said his team is working to finalize a lease for a Bloomfield headquarters. "With anything there's going to be growing pains, but I think the upside is tremendous," Ward said. Statewide ambitions Cochran was a social equity appli- cant, which means he met criteria that includes having an average household income of less than 300% of the state median household income over the last three tax years, and living in an area disproportionately impacted by drug-related criminal convictions. Green Coach is backed by Massa- chusetts-based multistate operator Curaleaf as an equity joint venture, which allowed it to bypass the lottery process. In addition, a Massachusetts limited liability company — The Collec- tive — founded by former Curaleaf executive Patrik Jonsson, is listed as a Green Coach principal. An equity joint venture is a business in which a social equity applicant partners with an existing medical cannabis retailer or cultivator to estab- lish a new company. That business must be majority owned by the social equity applicant. "Patrik Jonsson was tremendous in helping us get going with a business plan — a lot of us are very new to this industry," Cochran said. Cochran said his company has plans to hire at least 25 employees and three to four support staff during its first year. The goal is to eventually expand statewide. He said he wants to hire a majority of his employees from places dispropor- tionately impacted by the war on drugs, and help with the state's community reinvestment efforts. "I think a lot of states missed the bull's-eye on delivery," Cochran said. "Massachusetts and other states have had a hard time setting up social equity delivery companies."

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