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January 9, 2023 Industry Outlook | Cannabis

CT cannabis industry to reach full steam by end of 2023

Andrew Glassman
By Andrew C. Glassman and Matthew D. Glennon

Based on what we are hearing from the Connecticut Department of Consumer Protection (DCP), Connecticut’s recreational cannabis industry is on-track to be fully up and running by the end of 2023.

Matt Glennon

Connecticut residents will be able to purchase recreational cannabis in at least a few locations beginning Jan. 10, with more to follow toward the end of the year.

Under Connecticut law, adult-use recreational sales can only begin 30 days after the DCP announces that at least 250,000 square feet of cultivation space (which includes actual growing canopy and manufacturing space) is available for the production of recreational cannabis inventory.

On Dec. 9, DCP announced that threshold had been meant as a result of all four existing medical marijuana cultivators having received their hybrid cultivation licenses.

The existing dispensaries that have obtained their hybrid sales licenses thus are primed to begin recreational sales.

Additional applicants remain in the queue

In addition to the approved hybrid cultivators and retailers, the DCP continues to be busy with approvals for lottery winners, cultivators purchasing licenses for cultivation in disadvantaged areas, and equity joint ventures between existing hybrid license holders and social equity qualified individuals.

This group of potential licensees, most of which are in the provisional license stage, will be new to Connecticut’s cannabis industry. Among this group are the social equity applicants as well as non-social equity applicants who have won the lottery.

When the dust settles, it is likely that as many as 12 retailers, four micro-cultivators, 10 delivery companies, four hybrid retailers, 10 food and beverage businesses, six packagers, six product manufacturers, four transporters and 24 additional cultivators (with at least 15,000 square feet of production plant capacity), plus equity joint ventures, will join the industry to provide the full services necessary to properly supply retail cannabis consumers.

We will only know the actual number of permanent license holders after each new applicant completes its 14-month provisional licensing process, and each successful applicant receives its final license.

Because this provisional licensing process is well under way, it is likely that most of these applications will be completed and phased into the program throughout 2023.

Real estate challenges

Finding suitable real estate in towns friendly to this industry will continue to be a challenge for licensees. While many towns continue to prohibit cannabis operations, others have welcomed them.

Several towns that were reluctant to allow the siting of facilities have begun to indicate a greater willingness to accept such applicants. Yet, in some communities, such as Fairfield County and greater Litchfield, voters continue to affirm that cannabis is unwelcome.

It still remains unclear how many municipalities will permit cannabis sales, cultivation, special product manufacturing and cannabis services companies. Even in those towns permitting cannabis businesses, most are creating discrete zones that require applicants to carefully navigate local zoning regulations and their siting processes.

Employment boon

The Connecticut cannabis industry is creating hundreds of new job opportunities to meet the need for retail service employees, cultivation experts, drivers and administrative staff.

Hiring has already begun and will continue to increase as the licensing process unfolds throughout 2023.

Future lotteries

The DCP continues to say that once the final licenses have been issued and it has time to evaluate the remaining needs of the industry, it will determine when and if additional licenses should be issued.

If there is a need for additional licenses, they will be procured through an additional lottery, or lotteries. We do not expect decisions to be made until a more mature, functioning industry exists, and the determination will almost certainly not be made prior to mid-2023.

The national 2022 MJBiz Conference in Las Vegas was pulsing last fall with tens of thousands of attendees. It’s clear that the cannabis industry is here to stay in our country.

Connecticut seems to be opening adult use at just the right moment, with the benefit of lessons learned from earlier states, but still well ahead of many others just starting the process.

Andrew C. Glassman is chair of the cannabis, CBD and hemp practice at the law firm Pullman & Comley. Matthew D. Glennon is also an attorney in the practice.

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