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January 10, 2024

State officials crack down on unlicensed cannabis sales

Office of the Attorney General Connecticut An example of illegal cannabis products found by state investigators.

State officials are cracking down on unlicensed cannabis companies selling products in the state, with Attorney General William Tong announcing this week he’s suing seven companies for illegal operations.

Tong filed seven new enforcement actions against wholesalers Shark Wholesale Corp. in Bridgeport, Star Enterprise 74 LLC in New Britain, and RZ Smoke Inc. in Suffield and four retailers — Greenleaf Farms in New London, Smoker’s Corner in Norwich, Anesthesia Convenience & Smoke in New Haven, and Planet Zaza in East Haven. In the suits, Tong is alleging violations of the Connecticut Unfair Trade Practices Act that carries fines of up to $5,000 per violation.

The move comes a week after Tong issued a cease and desist letter to HighBazaar organizers operating an unlicensed cannabis marketplace at the Masonic Temple Day Spring Lodge in Hamden.

Hemp-derived products in CT

While adult-use cannabis was legalized in Connecticut in 2021, and the market opened in Jan. 2023, non-licensed cannabis companies still aren’t allowed to sell hemp-derived tetrahydrocannabinol (THC) products not seen on dispensary shelves. THC is the psychoactive compound found in cannabis, differing from the non-psychoactive ingredient cannabidiol (CBD).

Since the 2018 Farm Bill, which authorized hemp production federally and removed hemp from the Drug Enforcement Administration’s (DEA) schedule of controlled substances, some hemp farmers and processors began extracting CBD from their plants and essentially converting it to delta-7, delta-8, delta-9, delta-10, or another THC alternative.

In many states, including Connecticut, those products have been sold in non-licensed stores since then because they were derived from legal hemp and are okay at the federal level.

But despite the federal law change in 2018, Connecticut began prohibiting the sale of synthetic cannabinoids and high-THC hemp-derived products in non-licensed stores in October 2023, meaning gas stations, smoke shops and other businesses that sold those products had to take them off shelves. The same state law that made the regulatory change also allowed hemp operators to apply for cannabis licenses and convert from hemp cultivation to legal marijuana, something the original cannabis law signed in 2021 neglected to do.

The crackdown

Following “unannounced visits to vape shops and gas stations,” Tong’s investigators found these seven companies routinely selling illegal cannabis products containing delta-8 and delta-9 THC in their businesses. Products found include blunts, flower and edibles mimicking popular youth-oriented snack foods.

Following these new suits, Tong’s office now has 10 pending enforcement actions related to illegal cannabis sales. The state has secured judgments against four Connecticut retailers totaling $40,000 so far, but a portion of those payments will be suspended if the retailers comply with terms of the judgment, including ceasing all sales of illegal cannabis.

Impact on CT investment

Notably, Connecticut’s current cannabis law is one of the barriers preventing a company that’s taken a seven figure investment from the state, 1906, from selling its products here. 1906, which received a $1.25 million investment from the quasi-public investment arm of the state Connecticut Innovations in 2022, still lacks a cannabis license of any kind to manufacture products in the state, according to data from the state Department of Consumer Protection.

The company’s products, which includes hemp-derived THC pills and capsules, are available in dozens of other states legally because of the 2018 Farm Bill, but Connecticut’s new regulations adopted in October prevent 1906 from selling here without a license. State law also currently restricts the sale of pills, capsules and tablets to medical marijuana program patients, and the products aren’t legal on the recreational side yet.

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