Connecticut Democratic lawmakers will make the legalization of adult-use cannabis a top priority this year after failing to pass legislation last year. Although medical marijuana was legalized eight years ago in 2012, efforts to fully legalize its use have failed to gain traction.

Last year’s legislation called for the following:

Impose a $35-per-ounce tax on flower ($13.50/ounce for trim) on transfers from cultivators

Impose a 6.35 percent tax on retail sales, plus a 3 percent local sales tax

Distribute the bulk of the revenue to the Community Development Corporation Trust Fund to fund early literacy, underserved schools, and otherwise improve the lives of people living in economically distressed and underserved communities

During a news conference on Jan. 23, Senate President Pro Tempore Martin M. Looney (D-New Haven), said lawmakers would take the three bills that failed last year and combine them into one proposal that would address regulation, expungement of criminal records, an equity commission and taxation. While they will be pushing hard for full legalization, those who favor legalization continue to face stiff opposition among Republicans who fear recreational use will have negative societal impacts. In this review, we take a look at the history of Connecticut’s medical cannabis program, the existing marketplace and the potential for future growth.

History

On May 31, 2012, Connecticut became the 17th state to approve medical marijuana with the signing of HB 5389, An Act Concerning the Palliative Use of Marijuana. The act provides legal protection for patients, physicians, caregivers, licensed dispensaries, and licensed producers when using, recommending or handling medical marijuana in accordance with the law. On Oct. 1, 2016, those protections were extended to advance practice registered nurses.

The first six dispensaries opened in September 2014. Although all were private at the time, three are now public as a result of acquisitions.

Arrow Alternative Care, Inc.

Bluepoint Apothecary, LLC, now Bluepoint Wellness and part of Green Thumb Industries (CSE: GTII) (OTC: GTBIF)

D & B Wellness, LLC (Compassionate Care Center)

Prime Wellness of Connecticut, LLC, affiliated with Acreage Holdings (CSE: ACRG) (OTC: ACRGF)

Thames Valley Apothecary, LLC

The Healing Corner, Inc., which in May 2019 was acquired by publicly traded Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNFF)

In 2016, three more privately held dispensaries were licensed by the state.

Arrow Alternative Care #2, Inc.

Caring Nature, LLC

Southern CT Wellness & Healing, LLC

And, on Dec. 11, 2018, Connecticut approved nine new licenses. They are:

Bhadra Seva LLC, (Its license was acquired by privately owned Fine Fettle Dispensary, which also won its own license.)

GR Vending CT LLC, (dba Grassroots Cannabis) It was announced in July 2019 that Curaleaf Holdings, Inc. (CSE: CURA) (OTC: CURLF), would purchase Grassroots in a cash and stock deal valued at approximately $875 million. The deal is expected to close this spring.

Willow Brook Wellness LLC

Arrow Alternative Care #3

Bluepoint Wellness of Westport LLC, part of Green Thumb Industries

Affinity Health & Wellness Inc.

Tedra Health LLC, operating as Nature’s Medicine

C-3 Ventures LLC, operating as Still River Wellness

In addition to dispensaries, of which 17 are currently operational and which can be found here, the state awarded four companies marijuana-growing licenses on January 28, 2014. Connecticut law allows up to ten to be licensed. So there is room for significant growth in this area.

Theraplant – locally owned and operated

CT Pharmaceutical Solutions – Its license was purchased by Tuatara Capital, L.P., a N.Y.-based private equity firm, and Connecticut Pharmaceutical Solutions in Aug. 2018

Curaleaf

Advanced Grow Labs of Fairfield, which was acquired last year by publicly traded Green Thumb Industries Inc.

Existing Market

To qualify, a patient needs to be diagnosed by a Connecticut-licensed physician or advanced practice registered nurse as having one of the following debilitating medical conditions. The list started with 11 medical conditions in 2012 and has grown to 36 for adults. Those under 18 did not begin to qualify until 2016 and to date there are only 10 qualifying conditions. The maximum allowable monthly amount is 2.5 ounces unless a physician indicates a lesser amount is appropriate.

As of January 26, 2020, there were 38,549 patients registered to receive medical marijuana and 1,218 physicians. Connecticut’s Department of Consumer Protection operates the state’s medical marijuana program. It is responsible for all licensing of dispensaries and producers.

As of 2018, Connecticut’s population was approximately 3.573 million. Since legalization, the state has seen a sharp rise in the number of registered patients going from 2,000 when the program began, to nearly 39,000 today. That’s due to the rapid increase in the number of qualifying conditions.

Form factors include: extracts, sprays, tinctures, oils, capsules, pills, pre-rolled cigarettes, baked goods, raw material (flower), topical applications, lotions, vape cartridge and pen.

Connecticut’s medical cannabis market has drawn attention from out-of-state companies such as Acreage Holdings, Curaleaf Holdings, Green Thumb Industries and Trulieve, which have entered the market or expanded prior operations through acquisitions.

Last May, the production of industrial hemp was legalized when Gov. Lamont signed Public Act 19-3. At the time, Lamont said it will help to strengthen the state’s agricultural economy and create jobs. As of last September, the State Department of Agriculture had issued 82 licenses for prospective hemp growers, two processors and 21 manufacturers.

The Connecticut Farm Bureau Association estimates that one acre of hemp can produce up to 1,500 pounds of hemp flowers, which can result in up to $150,000 in profits. In November 2019, Vega Holdings LLC, which holds a pilot hemp license, was awarded a $150,000 investment from the Minority Cannabis Business Association and Merida Capital Partners, a N.Y.-based private equity firm.

Future growth

After coming close in 2019, Connecticut lawmakers plan another push in 2020 to regulate and tax marijuana for recreational use. Many cannabis companies recognize the potential for growth. During last year’s push to legalize recreational cannabis use, Connecticut’s Finance, Revenue and Bonding Committee endorsed an estimate from state analysts that first-year sales would generate about $41 million in tax receipts.

Even absent potential adult-use, the medical market is still in its early days. In an interview with the Hartford Business Journal, Trulieve CEO Kim Rivers said: “We see Connecticut as an exciting market for us even though it is not at the same level yet as we are in Florida. And, as we’ve stated, our expansion focus is in the Northeast. It’s early still for Connecticut and with the limited dispensaries and physician network, we do not believe it has reached its full potential growth rate.”

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Exclusive article by Susan R. Miller Susan R. Miller, an award-winning South Florida-based writer and editor, has spent her career writing about a wide range of subjects in print and online, with a focus on the business of healthcare, law, and nonprofits. She launched her own PR and content marketing firm in 2013 and continues to write for a variety of clients and publications. For more information contact us