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August 11, 2022

With eight appeals already filed from denied cannabis cultivators, state could see more before Friday deadline

HBJ PHOTO | STEVE LASCHEVER Marijuana plants growing in Curaleaf’s Simsbury grow facility.
By Skyler Frazer

With the first provisional license already approved, the state is continuing to see a flurry of appeals from hopeful cannabis cultivators that were denied social equity status in July. 
    
At least eight prospective social equity cultivators have filed suits against the state alleging they were wrongfully denied social equity status last month. After 41 applicants submitted paperwork for social equity cultivation licenses — a license type specifically for people who lived in or currently live in areas disproportionately impacted by the war on drugs and meet specific income guidelines — the Social Equity Council (SEC) met July 12 to approve social equity status for 16 such cultivators.

One approved company, Massachusetts-based Insa, recently became the first company to be granted a provisional cultivator license in the state for recreational cannabis operations. The 14-month provisional license will give the company time to hire employees, iron out a detailed business plan, and outfit their facility before opening.

But the SEC denied 25 other social equity applications, and those applicants have a 30-day window to appeal the decision.

So far, appeals have come in from:

  • Connectibuds, with a business address in South Windsor, filed July 20.
  • The Hartford Cannabis Company, with a business address of 37 Alden St., filed July 22. The company’s president and social equity partner is Gloribel Diaz.
  • The Goods THC Co., with a business address of 24 Patricia Drive, East Hartford, filed July 26. Thomas J. Clark is the company’s social equity applicant and CEO.
  • Nautilus Botanicals, with a business address of 141 North Ave., Bridgeport, filed Aug. 3. This is a new business endeavor from hemp farmer Luis Vega.
  • Acreage Connecticut Cultivation, with a business address in New Haven, filed Aug. 4. This is a social equity partnership with New York-based Acreage Holdings and CannaHealth Founder Kebra Smith-Bolden.
  • Coastal Cannabis, with a business address of 31 Beach Way, Westbrook, filed Aug. 9. This business lists Marcus Phelmetto as a principal.
  • Elm City Agg, with a business address of 45 Streamview Cir.,Guilford, filed Aug. 9. Tyler Crespo, Katie Smegielski, David Machesney and Joseph Panela, Sr. are principals for the business.
  • Let’s Grow Hartford, with a business address of 141 Ridgefield St., filed Aug. 9. The venture is a partnership between David Salinas and Janice Flemming-Butler.

Michelle Bodian, a lawyer with Boston and New York law firm Vicente Sederberg LLP, said the slew of appeals isn’t a surprise based on what she’s seen in other states.

Michelle Bodian

    
“Litigation is an unfortunate part of cannabis adult-use implementation in a number of states,” Bodian said.
    
Bodian is co-chair of Vicente Sederberg’s hemp and cannabinoids practice and also works with companies trying to navigate and comply with Connecticut and New York’s licensing and regulatory processes.

“There’s a number of things that can go wrong,” Bodian said of the licensing process. “Given the perceived value of what’s associated with these licenses, it is, for many, worth it to continue the process via litigation and spend the money (to appeal).”

Bodian said that while some appeals have been successful in other states, a “win” isn’t always as simple as just getting a license after false denial. Appeals could result in a deeper look at the whole process, she said.

“It isn’t necessarily, ‘ok great, here’s your license now go on your way,’ ” Bodian said. “It might be that the state will re-rank you or they will modify their criteria and re-rank everyone.”

Bodian said that, like other legal matters, the appeal process can drag on for several months.

“By the time they get to the end result, some of these (social equity) cultivators might already be in operation,” Bodian said.

In anticipation of that potentially happening, Acreage Connecticut Cultivation filed an injunction request to attempt to stop the cultivator licensing process while appeals are disputed.

“Those are pretty rare — for a court to order a halt of the entire process — but I think that could be a potential outcome,” Bodian said of the potential for an injunction.

Prospective social equity cultivators who live, or have lived, in areas disproportionately impacted by the war on drugs were allowed to submit applications during a one-time, 90-day window not subject to the lottery, like other license types. The license is for companies hoping to open large-scale operations of more than 15,000 square feet of grow space, differing from micro-cultivator licenses that go to establishments with between 2,000 square feet and 10,000 square feet of grow space.

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