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November 15, 2022

State gives another chance to rejected cannabis business applicants, finalizes $50M loan program

Contributed | A cannabis plant.

The state this week voted to reconsider several cannabis applications that were previously denied based on certain criteria.

The Social Equity Council (SEC) on Monday voted to accept CohnReznick’s recommendation to reconsider six social equity lottery applications that previously failed to meet the ownership and control criteria guidelines. CohnReznick is the third-party firm picked by the state to assess whether applications meet social equity criteria before moving forward with the licensing process.

These applicants, which have also met the residency and income criteria, will now be forwarded on to the Department of Consumer Protection (DCP) for the next steps.
The six unnamed companies aren’t the only ones to have their status reconsidered after additional review from CohnReznick.

The council also voted to approve social equity status for disproportionately impacted area cultivator applicants The Goods THC Co. and Hartford Cannabis Company, reversing its July decision to deny these companies. Both businesses can now move forward in the licensing process.

Those two were among at least 11 companies that sued the state in July after the SEC rejected their social equity status for disproportionately impacted area cannabis cultivator licenses. At the time, the state had received 41 applications, approving 16 and denying the rest.

Several lawsuits indicated that the council was incorrect in their denials based on ownership and control criteria that was posted online after application windows had already opened. Some companies that filed lawsuits said their applications do follow ownership and control criteria, but didn’t formally indicate those details in their applications.

The companies dropped their challenges in October after the SEC opted to allow them to submit documentation related to ownership and control criteria. Social equity cultivators pursuing this license type, which allows for large-scale grow operations, had a one-time window to apply in a process not subject to the lottery. Earlier this month, the SEC approved social equity status for 11 other cannabis cultivators that had resubmitted documentation.

The SEC this week also voted to approve workforce development plans for two cannabis businesses based on recommendations from CohnReznick.

Further, the council approved details for the Canna-Business Revolving Loan Fund, its up to $50 million loan program for social equity cannabis businesses. Interest rates for the loans will be between 6% and 9% with an additional 1.5% interest rate discount for applicants that enroll and complete the SEC’s business accelerator program.

According to documents from the SEC, businesses can use the funds for: equipment purchases: purchase and installation of machinery; improvements or expansions; working capital and lines of credit; vehicles used to conduct official cannabis business; technology infrastructure; loan closing costs; environmental studies; and soft costs related to new construction or renovations.

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