The first application window for adult-use cannabis in Connecticut is officially open, leaving local operators scrambling for a limited number of licenses amid huge demand for market access.
“We are hoping to enter the adult-use space here in Connecticut in any capacity we can in all honesty,” said Luis Vega, CEO of Nautilus Botanicals. “We are going to try to go for broke.”
Vega operates Wepa Farms in New Haven, which cultivates hemp and produces hemp products. Vega, who uses medical cannabis to treat Crohn’s Disease, has been a longtime cannabis activist in the state and he hopes to enter the adult-use market.
Thursday, Feb. 3 was the first official day to apply for an adult-use license in Connecticut. The state will award nine separate types of licenses, with their respective application starts staggered week-to-week. The first types to become available were for cultivators in disproportionately impacted areas (DIA) and retailers.
The DIA cultivator applications will be reviewed by the state’s Social Equity Council, on a first-come, first-serve basis, according to Department of Consumer Protection spokesperson Kaitlyn Krasselt.
“There is no limit for the number of DIA Cultivator licenses that may be granted, but this is a one-time application period of three months,” she said.
Although there is no official limit to DIA cultivator licenses, other license types are limited, in this first round, to 12 retail, 4 micro-cultivator, 10 delivery, 4 hybrid retail, 10 food and beverage manufacturers, 6 product manufacturers, 6 packagers and 4 transporters. Those licenses are split between general and social equity applicants and all of them will be awarded through a lottery. A subsequent lottery for a new round of licenses is expected by the end of 2022, with future rounds held depending on demand from applicants.
Massachusetts has 350 cannabis licenses with “commence operation” orders, as of Jan. 20. This includes 194 retailers, 71 cultivators and 60 manufacturers. Meanwhile, New York is expecting to roll out its own licensing process later this year.
“I think that the state put up an opportunity, but the lottery process makes it difficult,” said Vega. “No matter how much work you do, it’s still left to the luck of the draw.”
At least five multi-state operators own existing medical dispensaries in Connecticut, accounting for half of the state’s total. There is a good chance that those companies have their eye on the new adult-use market, especially considering Grown In’s recent report on publicly-traded cannabis companies.
Acreage Holdings, one of the nation’s largest multi-state operators, cited Connecticut along with other states as a targeted “core state” where the company plans to expand its holdings, in a recent 10-Q filing with the SEC. Meanwhile, other multistate operators like Ascend Wellness and Jay Z’s California-based The Parent Company have both expressed plans to expand into Connecticut in recent investor presentations.
“Corporate cannabis is already here, because of the profitable and favorable corporate culture here in Connecticut. Big money gets honored over good business practices,” said Duncan Markovich, who also plans to apply for an adult-use license.
Markovich currently operates a health and wellness store that focuses on the use of CBD products, as well as plant-based nootropics and supplements.
“I’ll be applying for the micro-cultivation license, which allows you to do a little bit of everything at a smaller scale,” he said.
Markovich noted that supports the state setting aside licenses for social equity applicants, despite his not qualifying for such a distinction.
“The only thing I qualify for is privilege,” he quipped. “I’m a white boy who grew up on the South Shore of Connecticut.”
The state plans to release another round of licenses in late 2022, but Markovich worried that the current roll out will create too tight of a market.
“The numbers are way too tiny,” said Markovich. “We can’t just empower a select few to become millionaires overnight. you’re giving to people who already have money and significant strategic advantage over everybody else.”
Along with a dearth of available licenses, Vega also noted that there was a lot of demand.
“There are a ton of people,” said Vega. “Networking events have been highly attended. This is something on the forefront of our industry and the community. Cannabis is big in Connecticut. With the limited scope here, it makes it highly competitive.”