LOCAL NEWS

LOCAL NEWS RETAIL REALITY CHECK IN CONNECTICUT

While marijuana enthusiasts and social equity advocates are generally content with Connecticut’s new recreational pot law, those who were counting on Cannabis cash to bail out the state and local governments are suddenly less satisfied.

A new estimate of potential tax revenue generated by Connecticut’s fledgling Cannabis industry pours cold water on the big money dreams of some supporters. The report, from the state’s nonpartisan fiscal office, estimates that legal weed will bring in approximately $73 million in tax revenue by the fifth year of sales. This is a major departure from previous estimates that had adultuse sales generating up to $180 million in taxes annually.

Connecticut became the fifth state to pass an adult-use bill in 2021 – joining New Jersey, New York, New Mexico and Virginia – when Gov. Ned Lamont signed legalization legislation into law on June 22.

As of July 1, 2021, it is legal to possess up to an ounce and a half of Cannabis in Connecticut. However, retail sales are not expected to begin until May 2022 at the earliest. Because of this delay, the new fiscal office estimate indicates that adult-use sales would bring in just $4.1 million in taxes for the fiscal year ending June 30, 2022.

According to the estimate, the following year would bring in $26.3 million, the third year would generate $44.6 million, the fourth year would clear $71.2 million and the fifth year would see a total of $73.4 million in tax revenue.

In that fifth year of sales, $55.2 million in revenue would go to the state, with approximately $18 million going to municipalities.

Despite the lower-than-anticipated revenue estimates, Connecticut remains one of the more expensive adult-use states. Retail pot will be hit with the state’s standard sales tax, as well as a local tax levied by the town the dispensary is located in and, on top of that, an excise tax based on the potency of the pot.

Ultimately, Cannabis products sold in Connecticut will be subject to a 20 percent tax. While that’s on par with some other states in the region – Massachusetts and Vermont levy similar taxes – it could make black market marijuana more attractive to consumers.

When retail sales eventually begin and tax is collected, 60 percent of the revenue will go to social equity programs and reinvestment in communities disproportionately impacted by prohibition. Twenty-five percent is earmarked for a drug treatment/mental health fund and the remaining 15 percent will go toward funding the state’s legal pot program.

Unfortunately, a number of towns are considering opting out of retail sales before they’ve even begun, with some local governments having already passed outright bans or moratoriums on applications for dispensary licenses.

DISPENSARY ORDERED TO PAY WORKERS

AMassachusetts dispensary has been ordered to pay nearly $300,000 in restitution and penalties after the attorney general’s Fair Labor Division found that it failed to appropriately compensate 282 employees.

According to an investigation by the state, Theory Wellness, Inc., which has locations in Chicopee, Bridgewater and Great Barrington, didn’t provide premium pay for its employees. State law requires certain retail businesses to pay 1.2 times the normal hourly rate when employees work on Sundays or certain holidays.

In addition to the $300,000 settlement, the state issued a citation to the company’s CEO Brandon Pollock and its CFO Nicholas Friedman.

While the premium pay requirement will end in 2023, it is currently in effect and the attorney general’s office is serious about enforcing it. The Fair Labor Division started investigating Theory Wellness after receiving a complaint in December 2020.

Theory Wellness cooperated with the investigation and is now complying with the premium pay law. The company will also pay the wages owed to employees who weren’t correctly compensated.

In a statement, Theory Wellness blamed “inadvertent payroll errors” for the missing money.

“The complexities of a Cannabis company are vast with a litany of traditional business-related resources, such as mainstream payroll providers that handle setting up pay rates, unwilling to provide services due to our classification federally,” the statement read.

“This audit has been an opportunity to correct our policies and reaffirm our commitment to our team members, who make Theory what it is today.”

These kinds of growing pains can be expected as Cannabis continues to be embraced as a legitimate industry.

Photo by Karolina Grabowska

BRAVE NEW JERSEYANS ENDURE POT SMELL

New Jersey officials appear to have buyer’s remorse after voters enthusiastically embraced Cannabis on Election Day 2020. While reports leading up to the opt out deadline of August 21 indicated that about half the state, or 240 towns, would ban the legal Cannabis industry, the official numbers were far worse.

In the wake of the deadline, roughly 400 towns – about 71 percent of the state – opted out of the new legal marijuana industry. Even worse, local governments didn’t need the support of residents to enact these bans, as city councils have the power to opt out of the marijuana market simply by passing an ordinance, which explains the alarming disparity between voter support for legal weed and the multitude of municipal bans.

And, as if things weren’t strange enough in the Garden State, residents in Readington are reportedly being terrorized by the smell of pot.

A building being used as a cultivation site for medical and adult-use Cannabis (it used to be a Walmart) is emitting an odor that has area residents whipped into a frenzy. “During the day it wafts through the air and it’s actually so intense it gives me a headache,” a local man said of the nearby pot production site.

“I came out to feed the cat, my legs started shaking, I went down on the ground, my head was hurting, your eyes go first, I went down on the ground and finally I could get up,” resident Lyle Armstrong said of his harrowing grappling match with the odor.

Photo by Jeff W

Some of the townsfolk have signed a petition to fight the smell.

Fortunately, for the good people of Readington, the cultivation company has agreed to install “huge filtration units that use charcoal.” Additionally, Mayor John Albanese says the town plans to make the parking lot smaller (for some reason) and add more trees and plantings.

The odor shall be defeated!

RETAIL APPLICATIONS ACCEPTED IN NEW YORK

Photo by Jan Zwarthoed

While New York officials struggle to implement the state’s new adultuse Cannabis industry, retail sales are nonetheless on track to begin soon. The St. Regis Mohawk Tribe announced it is accepting applications for retail licenses from prospective cannabusinesses. This means the tribe could beat the state to the marijuana market by a year, as New York lawmakers don’t anticipate launching retail sales until sometime in 2022.

The St. Regis Mohawk Tribe adopted its own ordinance earlier this year that allows marijuana to be grown, processed and sold on tribal land. The ordinance also established a licensing process for recreational sales. While an official start date for sales has not yet been announced, the application process will move quickly. Business hopefuls who have submitted a preclearance form can expect a status update just two weeks after applying.

The St. Regis Mohawks, whose territory is located in Northern New York near the Canadian border, first legalized recreational Cannabis through a community referendum in 2019. They hope to make the state’s first Cannabis sales as soon as possible.

“Unlike other tribal territories, the Tribe’s Adult Use Cannabis Ordinance provides eligible tribal members with the opportunity to help develop this new industry for the benefit of the community … Tribal licensing builds upon our business community’s history of keeping revenue in Akwesasne to support community programs and services,” Tribal Chief Michael Conners explained.

Things are not going as smoothly for the state. However, there has been some progress of late as new governor Kathy Hochul has already made two important appointments to regulatory bodies that will oversee recreational Cannabis. While there is still a great deal of work to be done before retail sales can begin, the appointments are a positive step after the program’s implementation stagnated under former governor Andrew Cuomo.

Regardless of when sales officially begin, the deadline to opt out of the Cannabis industry in New York is December 31, 2021. However, the delays to the rollout have prompted State Senator George Borrello to introduce a measure that would push the deadline back, giving jurisdictions an additional year to decide if they want to opt out of the industry.

>> Continued from pg. 15

ANOTHER RETAIL

RECORD IN

Photo by Crystal Weed Cannabis

MAINE

Maine has once again broken a retail record, as the state took in more than $10 million in recreational Cannabis sales in the month of August.

After an inauspicious start to retail sales, Maine’s marijuana market has steadily increased. The first month of legal sales, October 2020, brought in just over $1 million. However, the state has managed to set a new sales record each month since then.

According to the Office of Marijuana Policy, which oversees the adult-use industry in Maine, retail sales accounted for approximately $10.2 million in the month of August – that’s up from $9.4 million in July. It marks the first time Maine has hit the $10 million milestone. The state’s 133,969 Cannabis sales in August brought in about $1 million in tax revenue.

Maine has always relied heavily on summer tourism to bolster businesses and officials believe the surge in Cannabis sales over the last three months is largely due to Vacationland living up to its name.

When adult-use sales launched in October 2020, six licensed shops serviced the entire state. Consumers also faced limited supplies and high prices. Now, 53 adult-use shops are operational throughout the state. The increase in supply has helped to drop pot prices. And, Cannabis customers have more options than ever, as concentrates and new infused products have grabbed a larger share of sales.

Additionally, Mainers are embracing legal marijuana, as no jurisdiction has chosen to entirely opt out of the industry.

While recreational Cannabis sales are on the rise, the program is still dwarfed by the state’s medical marijuana sales, which topped $22 million in October 2020 alone. The medical pot program has helped Cannabis become Maine’s most valuable crop.

NEW JERSEY EXPUNGES

HUNDREDS OF THOUSANDS OF POT RECORDS

Recreational Cannabis got off to a rocky start in New Jersey as 71 percent of towns in the state chose to opt out of the legal industry. But fortunately the expungement provision of the decriminalization bill signed into law earlier this year by Gov. Phil Murphy has been a success.

According to the state Judiciary, New Jersey has expunged more than 320,000 Cannabis-related cases since July 1, 2021, when the law went into effect. Those expungements have ultimately released around 1,200 people from probation.

While the program has provided relief for many eligible citizens, the state announced it has created a public education campaign designed to inform as many people as possible about expungement.

In addition to marijuana-related criminal records being expunged, the state is also dismissing certain Cannabis cases and rescinding weed-related failure to appear warrants.

“With our new Cannabis laws, we are turning the page on the failed War on Drugs and ensuring social justice here in New Jersey,” Gov. Murphy tweeted about the expungements.

Unfortunately, while social justice reform is off to a good start in the Garden State, the retail sales program is less encouraging. In addition to around 400 towns opting out of the legal pot industry, the Cannabis Regulatory Commission recently decided to bar the sale of edibles at retail marijuana shops.

According to New Jersey CannaBusiness Association President Edmund DeVeaux, “This is an opportunity for people to get used to the notion of legalized Cannabis without having to worry about the children or seniors and them accessing edibles, sweets, anything that contains THC, whether

Photo by Elsa Olofsson

intentionally or accidentally.”

The state has yet to announce a start date for retail sales. Let’s just hope that there’s something left of New Jersey’s pot program by the time it’s ready to launch.

NEW HAMPSHIRE

TO LET THE VOTERS DECIDE

Three lawmakers in New Hampshire have filed official requests with the Office of Legislative Services to place legalization legislation on the ballot.

Marijuana-law reform has long faced an uphill battle in New Hampshire, as both the State Senate and Gov. Chris Sununu oppose legalization. While the House has introduced legislation to legalize marijuana every year since 2014, recreational Cannabis measures continue to die in the Senate.

That roadblock has forced pro-pot lawmakers to change strategy and attempt to put the question of legalization before the voters in the form of constitutional amendments.

The three amendments that have been filed offer different takes on reform. Rep. Joshua Adjutant is proposing an end to the prohibition of Cannabis consumption, cultivation and sales for adults 18 and older. Rep. Andrew Prout’s measure would allow for possession, consumption and cultivation, but not sales. Finally, Rep. Renny Cushing went in a more conservative direction, as his initiative would only allow adults to possess pot for personal use.

It’s important to note that these Cannabis constitutional amendments must clear a high bar. First, to make the ballot, the measures must receive at least 60 percent of the vote in both chambers. The House could conceivably reach that supermajority threshold, but it will be far more difficult to accomplish in the GOP-controlled Senate.

Should the amendments advance through the legislature with 60 percent of the vote, they would be veto-proof and avoid landing on Gov. Sununu’s desk. But, for a measure to ultimately be enacted, it would have to receive a whopping 67 percent of the vote in the election. Fortunately, recent polling in New Hampshire found that roughly 75 percent of residents support legalizing Cannabis – so the 67 percent threshold appears to be within reach. Earlier this year, House committee members retained a legalization bill that would have established an adult-use program in New Hampshire. The decision effectively took legalization off the table for the rest of the year, as lawmakers cannot reconsider the bill until 2022. A separate bill to allow home cultivation was also retained by the committee. Lawmakers will again consider legalization when the legislature reconvenes next year. It is possible that the bill passes the House, which has advanced similar reforms previously. However, most believe it will not get past the Senate (even if it did, the governor would almost certainly veto the bill).

If recreational marijuana again stalls in the legislature, lawmakers are prepared to hand the issue over to the voters of New Hampshire.

Photo by Mike Von

Rhode Island on the Verge

Stop me if you’ve heard this one before, but … Rhode Island is close to passing a legalization bill. In fact, according to Senate President Dominick Ruggerio, lawmakers are “very close” to solving their pot problem.

Should legislators reach a deal on legal Cannabis, a special session could be convened this fall to take up the issue. This conceivably puts legalization in play for 2021.

The state is one of just two in the Northeast region that has failed to legalize marijuana. This year alone, New York, New Jersey and Connecticut have passed adult-use laws, joining Maine, Massachusetts and Vermont as legal pot states.

Rhode Island’s Senate approved a legalization measure earlier this year, but it stalled in the House before the legislative session adjourned.

Nonetheless, Ruggerio says lawmakers have been working on a compromise ever since.

“We’re hoping we can get Cannabis done. We’re very close. We’re making progress, but we’re not there at this point in time … There’s a couple stumbling blocks that they are addressing right now, and we’ll see how that shakes out,” Ruggerio explained.

Lawmakers have been attempting to craft legislation that reconciles legalization bills proposed by the House, Senate and Gov. Dan McKee. One of the main sticking points is a disagreement over who should oversee legal Cannabis in Rhode Island. While the governor and the House would tap the Department of Business Regulation to run the state’s pot program, the Senate is committed to a “separate commission” taking on the regulatory role.

Additionally, advocates claim that the state’s pot proposals don’t adequately address social equity. They’re hoping to see specific reforms that other states have included in legalization, like earmarking 50 percent of marijuana

Photo by Kindel Media

business licenses for qualified equity applicants.

Asked about the social equity element of the state’s legal pot plan, Rep. Karen Alzate said, “We can’t reverse the harm of the war on drugs, but we can start to repair it by passing automatic expungement and waiving all related fines, fees and court debt.”

Senator Ruggerio maintains that the marijuana measure passed by his chamber in June included “very strong social justice provisions.”