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September 26, 2022

State gives second chance to some denied cannabis applicants, approves more 

YEHYUN KIM :: CTMIRROR.ORG A flowering cannabis plant.

Following several lawsuits from cannabis entrepreneurs that had their social equity status denied, the state will allow companies to submit updated documentation detailing ownership and control details about their businesses.

The Social Equity Council held a special meeting Monday to approve a slew of applicants’ social equity status and also conduct some housekeeping based on controversy surrounding previous denials. Beginning in July when the council started approving and denying social equity status, some rejected applicants sued the state and council because of a lack of clarity regarding ownership and control requirements and disclosures.

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

Following an executive session Monday, the council voted to approve language clarifying its ownership and control guidelines so that a social equity candidate “exercises operational authority over daily affairs of the business, has the voting power to direct the management agents and policies, and receives the beneficial interests of the business."

Following that clarification, Social Equity Council board member Ojala Naeem motioned to allow Brownstone Sales LLC, Leaf CT LLC, Let’s Grow Hartford LLC, Shangri-La CT Inc. and White Oak Apothecary LLC to resubmit their respective social equity applications with updated ownership and control information.

“Without admitting that the council erred in denying the license or otherwise failed to follow appropriate procedures, I believe it would be in the best interest of the council to reconsider these applications,” Naeem said.

The updated applications must be filed within 10 days of receiving notice of the change and the council must act on those within 30 days of the date of notification.

One applicant, Missouri-based Shangri-La CT, has already received several approvals from the Social Equity Council to move forward with businesses, including: a disproportionately impacted area cultivator business; a social equity dispensary; and two general lottery dispensaries.

Applications not selected in the social equity lottery are automatically put into the general lottery, so companies that submitted dozens or potentially hundreds of applications into the first selection round have more chances in the general round.

In addition to these changes, the Social Equity Council approved social equity status for five businesses and denied it for three.

The breakdown is as follows: 

  • Four equity joint ventures were approved
  • One product packager was approved
  • Two equity joint venture hybrid retailers were denied
  • One lottery hybrid retailer was denied

The Social Equity Council also approved workforce development plans for nine unnamed companies, a key step before existing medical dispensaries are allowed to begin converting their facilities for hybrid sales.

All approvals and denials were made based on recommendations from accounting firm CohnReznick, the third party company picked to review applications before going ahead to the Social Equity Council.

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