This story has been updated.
Connecticut legislators are considering a bill that could change the speed with which certain owners of cannabis companies can sell their businesses, but state officials are concerned about the effect that could have on the nascent state marijuana industry.
The bill, House Bill 7178Deals specifically with what are called action joint ventures, which are commercial partnerships between well -funded cannabis operators and “candidates for social equity” – people who have grown or live in parts of the state who have been the hardest affected by the war against drugs.
State files show that at least 38 cannabis companies have been created in this way in recent years. But some of the candidates for social equity who have trained these partnerships now ask the legislators of the State for permission to rest after three years.
They need the authorization of the Legislative Assembly, because the law of the State currently prevents candidates for social equity from selling their ownership challenges in cannabis companies for seven years.
The creation of joint ventures in shares was one of the several ways that the legislators have tried to guarantee that individuals from historically disadvantaged communities have benefited from the legalization of marijuana and have had the opportunity to become entrepreneurs in the new industry.
To obtain a license, candidates for social equity must show that they hold at least 50% of the joint venture in shares and prove that they live or have been raised in one of the many Historically depleted communities with a high rate of drugs related to drugs.
Kennard Ray, an owner of social equity, said that he understood why the legislators wrote the law in this way in 2021. He declared that he was intended to protect candidates for social equity, like him, which entered a commercial partnership with richer companies and individuals.
The legislators did not want other investors and operators to use candidates for social equity to obtain a license, then force them to get out of the company once their dispensaries, their culture facilities and their delivery services were operational.
“I appreciate the many protections that have been put in place to guarantee that people are not content to get rid of and get out of the business,” said Ray, who has a participation in a cannabis culture installation and several dispensaries operating under the name of Fine Fettle.
But now that he has several years of experience in the industry, Ray said that he thought that the seven -year ban on selling his participation is too strict.
Ray and other owners of social equity have declared to the legislators this year that they wanted more flexibility to stop when it was logical for them, financially or personally.
They asked for the possibility of selling their businesses after three years of operations.
Derrick Gibbs, who helped found Budr cannabis, explained to the legislators during a public hearing in March that many things can happen in seven years, in particular in an industry that matures and still evolves.
The value of a cannabis company could be assigned in the years to come by regulation, federal tax policy, financing problems or saturation on the recreational market of cannabis in Connecticut.
“Seven years is very long in any industry, and many things can change. If a business is not doing well, seven years, it is a significant duration for a person to be locked in a
operation that has trouble, ” Gibbs told legislators. “On the other hand, if a business is doing well, why should an owner of social equity be forbidden to choose to withdraw both the most financially advantageous?”
Ray said it this way: “One day you can be high. Your stock is in place. And then the next day, whether by the change of policy or simply because there is a supersaturation of the product, your business falls.”
Representative Roland Lemar, who chairs the general committee of the legislature, said that he included the reasons why the owners of cannabis companies requested more flexibility to sell their issues.
“I heard some joint venture holders that they wanted to be able to capture part of the value inherent in their participation,” said Lemar. “They felt likely to lose a lot of value if they had to maintain their participation during the additional four years.”
But Lemar said he was still hesitant to change the law on cannabis that had been adopted in 2021 due to the effect it could have on industry as a whole.
Demanding that candidates for social equity retain their companies for at least seven years, Lemar also aimed to promote local property in industry and guarantee that the market was not dominated by large multi-state cannabis companies. And he said he was concerned about the disappearance of this objective if the law is modified.
“What are you ending?” Which product you find with after only three years? Is it more controlled by companies and less of community enterprises and supported by the community through the State? ” Lemar asked. “I’m really worried about it.”
The people who applied as candidates for social equity and created joint ventures in actions in the past two years knew at the time that they had to maintain this participation for seven years, noted Lemar.
Members of State Social Actions CouncilWho oversees part of the license process for the cannabis industry, also expressed their concerns about such a change.
During a recent meeting, Brandon McGee, Director of Social Equity Councilsaid he had discussions on the proposal, but said that the SEC had not yet decided if it supported the proposal.
McGee, who did not appeal to this story, said one of the concerns was that the owners of social equity completely disappear from the cannabis market.
“I know that there are social action entrepreneurs who have the impression that we should simply move it arbitrarily to three years and call it one day,” said McGee. “But that’s not where we are right now.”
The owners of cannabis stores like Ray argue that no other entrepreneur of the Connecticut is limited to sell their business in the same way as candidates for social equity.
Ray pointed out that his partner Benjamin Zachs, a Fine Fettle manager, did not stop selling his side of their joint business. It is only Ray who is limited to disinvestment as a applicant in social actions.
Ray has no immediate plans to decide in the dispensaries he operates in Manchester and several other cities and cities, but he said that he wanted to know that he had this capacity if the right opportunity arises.
Correction
An earlier version of this story has resulted in the role of Derrick Gibbs in Budr cannabis. He is founder, not the candidate for social equity.