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August 8, 2022

Well-known CT hemp grower was denied social equity status for cannabis venture; now’s he’s appealing decision

HBJ PHOTO | STEVE LASCHEVER Luis Vega, owner of hemp farm and vendor Wepa! Farms, wants to expand his business to grow and sell cannabis in Connecticut’s recreational market.

A third cannabis company — operated by a well-known figurehead in Connecticut’s existing hemp and CBD market — is appealing the state’s decision to deny its social equity status for a cultivator license.

Nautilus Botanicals, a Bridgeport-based cannabis grow operation founded by Luis Vega, is appealing the Social Equity Council’s (SEC) denial in July of its status for a disproportionately impacted area (DIA) cultivator license. Vega is a well-known hemp farmer who has been operating North Haven-based Wepa! Farms since 2016. His application was among 25 denied to qualify for social equity status after the SEC approved 16 other DIA applications.

The business has a listed address of 141 North Avenue, Bridgeport.

Nautilus’ appeal, which was filed Aug. 3 by attorney’s from Shipman & Goodwin LLP in Hartford, argues that the SEC was incorrect in its determination that the business didn’t meet “control requirements of exercising operational authority over daily affairs of the business and having voting power to direct management, agents, and policies.”

“The SEC misread its application documents and failed to consider the totality of documentation evidencing ownership and control, thereby erroneously denying Nautilus SEA status and causing it to lose a substantial amount of money, time, business opportunities, investments, and competitive advantages,” part of the appeal reads. “Specifically, the SEC misread Nautilus’s Operating Agreement and erroneously failed to consider the SEA’s role as Chief Executive Officer and his possession of 65% of the ownership and voting interests in Nautilus.

DIA applicants could submit paperwork during 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%.

Nautilus says that nowhere in the SEC’s checklist of required documents published in February is there language requesting evidence of a social equity applicant's control of at least 65% of the proposed company's daily affairs and ownership breakdown.

Regardless of that, the appeal states that Vega meets the statutory criteria of a social equity applicant and “holds 65% of the ownership interests of Nautilus, which are called ‘Membership Interests’ in Nautilus’s Operating Agreement. Three investors hold the remaining 35% of the membership interests.”

At a press conference in March, Vega said Nautilus Botanicals could create about 150 jobs in the Bridgeport area if licensed. 

Like the two appeals filed before it, Vega’s appeal names the Social Equity Council, state Department of Economic and Community Development and Department of Consumer Protection as defendants.

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