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August 1, 2022

Hartford Cannabis Company appealing social equity cultivator license denial

Photo | CNN Business

A Hartford company among the 25 applicants rejected for social equity cultivator approvals last month is appealing the Social Equity Council’s decision, according to court records.

The Hartford Cannabis Company, with a business address of 37 Alden St., filed a petition for administrative appeal in Hartford Superior Court on July 22, alleging the Social Equity Council (SEC) was incorrect in its determination that it did not meet the criteria to qualify as a social equity applicant for a disproportionately impacted area cultivator license. The company’s president and social equity partner is Gloribel Diaz, according to the complaint.

Forty one social equity applicants submitted paperwork for DIA cultivation licenses, a one-time, 90-day window not subject to the lottery, like other license types. Last year’s cannabis law defines a disproportionately impacted area as a U.S. census tract in Connecticut that has a higher historical conviction rate for drug-related offenses, or an unemployment rate greater than 10%.

The SEC met July 12 to approve social equity status for 16 DIA cultivators. It denied the 25 other applications.

Hartford Cannabis Company’s complaint alleges that the SEC added language regarding DIA licensing requiring a 65% ownership split between a social equity applicant and other investors without discussing publicly or disclosing it to those who had submitted paperwork

“The failure of the Council to debate and vote on this material change in the control criteria not only constituted an improper retrospective regulatory change but violated the very enabling statute regarding such review in 21a-420g: ‘Social Equity Council shall post such necessary documentation requirements on its Internet web site to inform applicants of such requirements prior to the start of the application period’ which occurred between February 3 to May 4,’ ” part of the complaint reads.

Further, the company says in the complaint that its social equity owners cross the 65% ownership threshold regardless, so they shouldn’t have been denied. Per the complaint, Diaz is a social equity applicant and owns 59.38% of the company and Thomas Clarke is another social equity applicant for the entity. Together, all social equity applicants that make up the company own 65.1%, according to the complaint.

The complaint, filed by Michael J. Donnelly of Murtha Cullina LLP, names the Social Equity Council, state Department of Economic and Community Development and Department of Consumer Protection as defendants.

When the SEC began discussing the 25 DIA applications recommended for denial last month, some members of the council wanted more clarity. CohnReznick, the third-party firm picked to analyze applications before recommending approvals and denials to the council, disqualified 17 companies based on ownership and control standards and another eight based on residency and income issues.

In the council’s July meeting, SEC member Subira Gordon asked that the council separate the eight applications that solely failed the ownership and control review because the state’s legalization law has lots of “gray area” and ambiguity when it comes to the 65% ownership stipulation. She was concerned that these applicants were recommended for denial based on simply incorrectly filling out their intentions to pursue a joint venture with other financial backers.

Gordon and SEC member Corrie Betts both voted against those eight denials, but ultimately they were overruled.

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