Yesterday, Connecticut Governor Ned Lamont filed legislation that would establish an recreational (“adult use”) cannabis market in the State. The Governor’s proposal would create a licensing process for cultivators, retailers, micro-cultivators, product manufacturers, food and beverage manufacturers, product packagers, and delivery services. Sales would begin in May of 2022, with anticipated state revenue of $33.6 million in fiscal year 2023 and $97 million by fiscal year 2026.
In part, this proposal is a response to adult use legalization in nearby states like Massachusetts and New Jersey, with New York close in tow. “Massachusetts dispensaries are advertising extensively here in Connecticut,” Lamont said, “and, rather than surrender this market to out-of-staters, or worse, to the unregulated underground market, our budget provides for the legalization of recreational marijuana.” This measure is also meant to address revenue shortfalls caused by the COVID-19 pandemic, and is part of a suite of proposals filed by the Governor, including sports gambling and new transportation-related fees, which are aimed at increasing the state’s revenue without resorting to excessive tax increases. If enacted, revenue derived from taxes on the adult use industry would be directed towards assisting distressed communities in the state. The proposal would also permit cities and towns to increase revenue through a 3% local excise tax on sales.
In terms of next steps, the Governor’s proposal will go before the state legislature. Connecticut House Speaker Matt Ritter indicated that adult use legalization will be a “priority” for House Democrats in 2021. He cautioned, however, that he believes the bill has a “50/50” chance of passing in 2021. In the event that the legislation fails, proponents could also pursue adult use legalization by means of a ballot question. However, enactment through the legislature provides the industry with the best means of legalization in the near future because the ballot question process in Connecticut can take upwards of 4 years.
We look forward to seeing how things play out in Connecticut. Be sure to follow our blog to stay up to date on this pending legalization effort and everything else concerning the cannabis industry.