If Gov. Ned Lamont gets his way, Connecticut will no longer wave the white flag to out-of-state cannabis markets, like neighboring Massachusetts, that are currently deploying advertisements to funnel away potential revenue streams.
During his budget address on Feb. 10, Lamont announced his legislative proposal for adult-use legalization, with cannabis sales to begin in May 2022. The proposal offers a comprehensive framework for the cultivation, manufacture, sale, possession, use and taxation of cannabis that prioritizes public health, public safety and social justice, according to a fact sheet he also released Feb. 10.
Revenue from taxing the adult-use cannabis market in Connecticut would generate roughly $100 million by fiscal 2026, according to Lamont’s proposed budget.
“And now our neighboring states are offering recreational marijuana on a legal and regulated basis,” Lamont said in his address. “Massachusetts dispensaries are advertising extensively here in Connecticut. And rather than surrender this market to out-of-staters, or worse, to the unregulated underground market, our budget provides for the legalization of recreational marijuana.”
Lamont’s 163-page proposed cannabis legislation, An Act Responsibly and Equitably Regulating Adult-Use Cannabis, states that prohibition has failed, and Connecticut needs a new approach to protect public health and safety, especially for communities of color disproportionately harmed by cannabis arrests and convictions. According to Lamont’s summary, the proposal provides expungement for cannabis possession convictions prior to Oct. 1, 2015, as well as expungement by petition after that date.
Under the proposed legislation, adults 21 and older would be allowed to possess 1.5 ounces of cannabis or equivalent amounts of other cannabis products. Possession of any amount above that would only be punishable by an infraction for a first offense, according to the summary. In addition, home grow would not be legal, but the criminal penalties would be substantially reduced.
The revenue streams from adult-use sales would begin May 2022, via sales taxes at retail and delivery and an excise tax on cultivation. The current state sales tax is 6.35% in Connecticut, which also applies to the purchase of alcohol. The excise taxes proposed include $1.25 per dry gram of flower, $0.50 per dry gram of trim and $0.28 per gram for wet cannabis, to be collected upon the first use, transfer or sale of cannabis.
In fiscal 2023, an estimated $33.6 million in revenue would be generated from the cannabis market in Connecticut, growing to $97 million by fiscal 2026, according to the summary. Beginning in fiscal 2024, the state would intercept 50% of the excise tax (estimated at $26.8 million by fiscal 2026), with those proceeds getting directed for municipal aid.
“These additional revenues will go to distressed communities, which have been hardest hit by the war on drugs,” Lamont said in his address. “Half the tax revenue should be allocated to pilot payments, in addition to the 3% local excise tax option. And, importantly, my proposed legislation authorizes the automated erasure of criminal records for those with marijuana-related drug possession convictions and charges.”
Similar to other states with adult-use cannabis programs, a 3% local excise tax option would allow cities and towns to benefit directly from cannabis retail in their municipalities for their own revenue.
Here, additional elements of Lamont’s proposal are provided (as listed from the summary):
- Market: The proposal preserves the medical market and sets up a well-regulated structure for adult use to ensure that people have access to safe, high-quality products. It aggressively limits marketing to children and allows cities and towns to zone cannabis businesses away from places where children gather. It updates the state’s Clean Indoor Air Act to incorporate cannabis smoking and all vaping.
- Licensing: Cannabis will be cultivated and sold by licensed adult-use businesses. The proposal establishes licenses for cultivators, retailers, hybrid medical/adult-use retailers, micro-cultivators, product manufacturers, food and beverage manufacturers, product packagers and delivery services. Delivery service, micro-cultivator, and food and beverage licenses have lower barriers to entry and thereby, will help promote equity in the market. Licenses will be allocated by lottery. Existing medical businesses will be able to convert to adult-use for a substantial fee.
- Driving: The proposal updates the state’s impaired driving laws to create a process to suspend licenses of drivers who are impaired but haven’t been drinking alcohol. It creates a plan to drastically increase the number of officers trained at different levels to recognize behavioral impairment and a public education campaign about the risks of impaired driving. The Department of Motor Vehicles will add staff to implement behavioral impairment standards.
- Costs: Department of Consumer Protection (DCP) will have the primary responsibility of regulating cannabis businesses and cannabis products and will have 64 positions to accomplish this. The Department of Mental Health and Addiction Services, the Department of Public Health, and the state Poison Control Center will also be provided additional funding to assess and manage public health.