Social Equity Applicant Sues After Being Denied Adult-Use Cannabis License in Connecticut
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Social Equity Applicant Sues After Being Denied Adult-Use Cannabis License in Connecticut

The Hartford Cannabis Company, which was disqualified from social equity status and denied a cultivation license, claims in a lawsuit that state officials changed the rules while the application process was already underway.

July 28, 2022

A social equity applicant is taking legal action after being denied an adult-use cannabis business license in Connecticut.

The state’s Social Equity Council approved 16 adult-use cannabis cultivation licenses earlier this month from a pool of 41 applicants.

RELATED: Connecticut Names 16 Adult-Use Cannabis Cultivation Applicants Approved for Next Steps in Licensure

The licensees meet Connecticut’s social equity requirements, which include specifications on income and residency, as well as a rule that the business is at least 65% owned by the social equity applicant.

The Social Equity Council was created by the Legislature through Connecticut’s adult-use cannabis law, which Gov. Ned Lamont signed last summer. The council is tasked with overseeing the rollout of the state’s adult-use market to ensure it benefits those most adversely impacted by the war on drugs.

A third-party firm reviewed the applications submitted for the social equity licenses and recommended the 16 that were ultimately approved to the Social Equity Council. Now, the applicants must complete a background check through the Connecticut Department of Consumer Protection and pay a $3 million fee to the state in order to secure a provisional license.

The Hartford Cannabis Company, a social equity applicant that was ultimately denied a cultivation license, claims in a lawsuit filed July 22 in Hartford Superior Court that the state and the Social Equity Council changed the rules while the application process was underway and refused to allow the company to amend its application, according to a CT News Junkie report.

Twenty-five applicants were disqualified from social equity status earlier this month on the grounds that they did not meet the state’s criteria, the news outlet reported. The lawsuit claims that there was no discussion at a meeting held in April on a rule change that required applicants with social equity status to be 65% owned and operated by the social equity applicant—the rule change that ultimately disqualified some of the applicants.

Members of the Social Equity Council expressed concerns earlier this month about the disqualification of eight of those 25 applicants, including Hartford Cannabis Company, because they were denied licenses based solely on their failure to meet the 65% ownership threshold, CT News Junkie reported. Some council members said the provision was ambiguous and could result the rejection of qualified applicants based on poorly articulated applications, according to the news outlet.

Two council members voted against disqualifying the eight applicants in question, CT News Junkie reported, but other members argued that the provision was necessary to prohibit large financial backers from using social equity applicants as a front to secure a business license that they intended to control.

The Department of Consumer Protection, Department of Economic and Community Development and the Social Equity Council are all named as defendants in the lawsuit, according to CT News Junkie, and the Hartford Cannabis Company is ultimately asking the court to reverse the council’s decision and reconsider its application.