Hartford Business Journal

14 HARTFORDBUSINESS.COM | NOVEMBER 13, 2023 Many new cannabis businesses have been slow to open in Connecticut. One of the newest is Zen Leaf Newington, a dispensary owned by multistate operator Verano Holdings. PHOTO | CONTRIBUTED Stuck In The Pipeline Dozens of cannabis startups are struggling to get fully licensed By Skyler Frazer sfrazer@hartfordbusiness.com A s adult-use cannabis dispen- saries continue to open across Connecticut, other types of marijuana businesses have been slow to begin operations. As of Nov. 1, 55 cannabis compa- nies had licenses pending, according to the state's online licensing data- base, with 40 of those businesses having received their provisional license, which gives entrepreneurs more than a year to get operations up and running. But just 10 companies — seven dispensaries, two growers and a delivery service — have fully active licenses, and are either operational or about to come online. Experts say there's potential for some prospective business owners stuck in the licensing pipeline to abandon their plans. In addition to a rigorous regulatory process, cannabis startups face a host of challenges, including a lack of capital and real estate options, as well as general tough economic conditions, experts said. "I think that's certainly going to happen, unfortunately," said Drew Richards, a CPA at accounting and consulting firm Marcum, referring to the potential for cannabis busi- nesses to not move forward with their licenses. "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.'" "I think it's kind of a combination of access to capital, as well as just the availability of locations throughout the state in those towns that allow cannabis businesses — it gets pretty limited," Richards said. Many startups are taking baby steps to get off the ground, instead of racing to be first to market, Richards added. The state's licensing process began about a year ago. The state Department of Consumer Protection, the agency tasked with overseeing both the medical and adult-use cannabis programs, said the slow rollout of businesses isn't a surprise, given the newness of the industry. DCP spokesperson Kaitlyn Krasselt noted that some cannabis businesses have up to two years to get fully licensed, before their expira- tion window closes. "These businesses have a lot of time to get up and running," she said. Licensing process Most businesses currently oper- ating in Connecticut's cannabis industry are owned or partially backed by companies that were active in the state's medical mari- juana market. Those larger, mostly multistate operators — like Curaleaf, Verano Holdings and even Hartford-based Fine Fettle — were allowed by the state legislature to expand into the recreational market, either directly via hybrid licenses, which allow them to serve both recreational and medical customers; or through partnerships with social equity entrepreneurs who are opening new Drew Richards ADULT-USE CANNABIS RETAIL SALES JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER Source: CT Dept. of Consumer Protection 2023 RETAIL SALES $15M $12M $9M $6M $3M $0

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