Several Cannabis business hopefuls in Connecticut are suing state regulators after being rejected as social equity applicants.
While there are likely to be additional suits brought by other companies that were rejected, the four current businesses suing Connecticut’s Social Equity Council (SEC) are The Hartford Cannabis Company, Connectibuds, The Goods THC Co., and Kebra Smith-Bolden who is working with Acreage Connecticut Cultivation.
All four companies were seeking equity licenses for large-scale cultivation, which would permit them to create grow facilities as big as 250,000 square feet.
Ultimately, the SEC rejected 25 social equity applicants for the cultivation license. The Council found that only 16 of the 41 applicants met the social equity requirements.
Rule Change Leads to Legal Action
According to The Hartford Cannabis Company, regulators changed their own requirements for social equity approval midway through the application process and then would not allow them to adjust their application.
The SEC changed their rules to require that applicants prove that 65 percent of the business’ day-to-day ownership is under the control of a qualified social equity applicant.
However, the companies suing the Council claim that the new rule was not adequately communicated and applicants were not given the opportunity to revise their paperwork.
“There was no debate or discussion by the SEC regarding this change or any update on the online checklist as to the required evidence concerning the level of control which needed to be submitted by an SEC applicant,” according to the lawsuit.
Support From Council Members
While the rule was adopted to prevent companies from using social equity applicants to obtain a license and then assuming day-to-day control of the company after the licensing process, not all Social Equity Council members agreed with the outcome.
Some members of the Council sympathized with the complaining companies and expressed concern that qualified business owners could be rejected due to ambiguous rules.
“I don’t think it’s fair that we should be voting where there’s any ambiguity, where it’s not clear,” Council Member Corrie Betts said. “Not when this is people’s livelihood, not when we’re talking about making sure we’re helping those that have been affected by the war on drugs. Who’s to say that this right here isn’t one of those individuals?”
The four companies suing the SEC want the court to reverse the Council’s decision and allow their applications to be reconsidered.