Applicants for CT cannabis licenses can submit unlimited entries to the lottery. Could that change?

Cherry Punch cannabis plants grow in a room with yellow light at the CTPharma cultivation facility in Rocky Hill, Connecticut, on December 13, 2022.

Cherry Punch cannabis plants grow in a room with yellow light at the CTPharma cultivation facility in Rocky Hill, Connecticut, on December 13, 2022.

Arnold Gold/Hearst Connecticut Media

Most cannabis licenses in Connecticut are awarded through a lottery system – a mechanism that state lawmakers thought would help with the goal of creating equity in the state’s new adult-use market.

But the applicants that won some of the coveted licenses submitted hundreds of entries each to the lottery, paying hundreds of thousands of dollars in application fees, to improve their chances of winning. That’s spurred interest in making changes to how Connecticut issues cannabis licenses.

“One of the concerns in watching the process be implemented was the situation we saw in which there were individuals applying for licenses who submitted 50 applications or more to enter the lottery,” said House Majority Leader Jason Rojas, D-East Hartford. “That wasn’t our intent.”

Rojas said state lawmakers expected people would apply multiple times to the lottery but didn’t intend for applicants to submit hundreds of entries. “It’s not in the spirit of the integrity of the process,” he said.

The law legalizing adult-use cannabis established a lottery system for awarding most licenses to operate in the legal market – with separate lotteries for social equity applicants, intended to be people most harmed by past prohibition of cannabis, and non-equity applicants – including the fee structure for the various license types. Any changes to the lottery system would have to come through new legislation in the General Assembly.

Rojas said he’s interested in looking into it as state lawmakers prepare to start the new legislative session on Jan. 4. “Is there a way to increase the cost for the second, third or fourth lottery application," he said, adding that he'd be "leery" of any proposal to limit the number of lottery entries that can be submitted because “caps are such a blunt instrument.”

The issue came up at an event hosted by the Connecticut Cannabis Chamber of Commerce in Hartford earlier this month featuring key stakeholders in the industry including those who’ve received provisional licenses to enter the new legal market.

“There’s lots of concern and outcry about the number of times someone can apply to the lottery,” said Andréa Comer, deputy commissioner of the state Department of Consumer Protection, speaking on a panel about marijuana cultivation. “The legislature wants to look at that and see if there’s a way to adjust that. It's not as easy as it sounds. We had talked about maybe the first 10 is one price and the next 10 is a different price.”

But that wouldn’t necessarily prevent someone who has a lot of resources from creating “a whole bunch of LLCs and applying those 10 times through all of those different LLCs,” Comer said. “So, it's not as simple of a solution as one would like.”

Comer is also chair of the Social Equity Council, which is charged with ensuring those disproportionately harmed by the war on drugs are included in the legal market, but will soon exit that volunteer role and her state job to become chief of staff for incoming state Treasurer Erick Russell.

State data shows that the companies, which submitted the highest number of lottery entries, received approval for provisional licenses. Retail garnered the most interest of all license types.

The company Jananii LLC submitted the most applications – 807 entries for a retail license and 770 entries for a multi-cultivator license – and has received provisional licenses for both license types. Chillax, which had the next highest number of entries, submitted 785 applications for a retail license and 758 applications for a multi-cultivator license. The company has received provisional licenses for both license types.

Both companies list out of state addresses as their business addresses– with Chillax in New Jersey and Jananii in Maryland – raising a concern that social equity applicants and others have had that Connecticut’s market would be flooded with wealthy individuals and multi-state operators, which has happened in other states. Connecticut’s licensing process has faced legal challenges from applicants who were denied social equity status. Many of the applicants were given an opportunity to resubmit their applications with changes.  

Gisele Tyler, a Wilton small business owner, who applied as a social equity applicant for several licence types including retail, food and beverage, and product manufacturer, said she planned to speak to state lawmakers about capping the number of lottery entries allowed. None of her entries were selected.  

“There needs to be some limit as to the number of licenses that go out in all of the sectors, particularly grow and retail,” she said.

Allowing an “unfettered amount” of applications resulted in what Tyler said she and other social equity applicants warned about – it opened the process to wealthy backers, who partnered with social equity applicants, and flooded the market. Tyler said she’d like to see lawmakers limit the number of lottery entries per license type to 10 to help even the playing field for equity applicants like her.

Tyler, a Black woman, grew up on the west side of Stamford, met the income threshold required for social equity applicants, and said she had a brother who was arrested for a drug offense. “I fit the bill neatly,” she said.

She spent $4,000 on her initial attempt to gain a cannabis license and said she’s wary of applying again in future rounds.  “I don’t have faith in process,” she said. “I’m not going to throw any more money behind this machine.”