social equity

Lawsuits Challenge Connecticut's Social Equity Process

More than a dozen businesses are hoping to break into the adult use cannabis industry, claiming they were wrongly denied social equity status.

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When Gov. Ned Lamont signed Connecticut’s adult use cannabis law in 2021, he praised the bill for its emphasis on social equity. The law established a council to make sure people from communities hardest hit by the war on drugs have the opportunity to get into the industry.

“We had a chance to learn from others and I think we got it right here in the State of Connecticut,” Lamont said in 2021. “We weren’t the first but we were the first to show we can get it right.”

But not everyone thinks Connecticut has gotten it right.

“We need to rectify some of these wrongs,” said Luis Vega, who is well-known in the Connecticut cannabis community.

Vega was one of the first in the state to legally grow hemp under a pilot program and advocated for social equity while Connecticut was crafting its recreational cannabis law. He has a previous conviction for marijuana possession.

Vega applied for a license to grow cannabis in a Disproportionately Impacted Area (DIA) with plans to set up operations in Bridgeport. He said the denial came as a huge shock.

“We were really under the impression that we completely filled every single checkbox,” he said.

Sixteen companies were awarded social equity status last month, allowing them to move forward with their applications for a DIA cultivator license.

Vega’s company Nautilus Botanicals is one of 25 that was denied. He is now suing the state.

“We spent countless hours advocating for what was going on and then to be denied a license is heart wrenching, in all honesty,” he said.

To qualify for social equity status, an applicant must meet criteria for residency, income, and ownership and control.

In its denial, the state said it determined Vega did not have enough decision power in day-to-day operations and could be outvoted by the other board members. The denial letter said, “The social equity applicant owns 65% of the company, but only has a 33% say in decisions regarding the business.”

Vega said the consultants who reviewed his application misinterpreted that, and he was not given the chance to amend the application or submit additional documentation.

“We definitely feel like we didn’t get a fair shot at it,” he said.

Two Social Equity Council members expressed similar concerns during a meeting in July.

“I don’t think it would be fair, where there’s any ambiguity that we should be voting,” Corrie Betts said.

Council member Subira Gordon said, “Saying no right now shuts down the conversation today and I think that is what I’m most concerned about.”

The determination on social equity status was made by an outside firm, CohnReznick, which based its decision on the information provided by the applicants. If documents were unclear or missing, the application was denied.

The council ultimately voted to accept the firm’s recommendations.

Council member Michael Jefferson defended the decision.

“We established the criteria and they [CohnReznick] simply followed the criteria,” Jefferson said.

A total of 14 applicants who were denied social equity status are suing the state. One of them is Kebra Smith-Bolden, who, like Vega, is a longtime social equity advocate. She runs a medical marijuana business in New Haven.

According to her complaint, none of the agencies involved in the licensing approval process, “offered any insight into what would be required to prove ownership and control before the application period opened.”

The complaint goes on to say the definition of control the state used in its denial letter, “does not appear anywhere in statute or regulation.”

That denial letter is included in Smith-Bolden’s complaint.

It shows the following definition of control:

*Exercises operational authority over daily affairs of the business.

*Has the voting power to direct the management, agents, and policies and receives the beneficial interests of the business.

The Attorney General’s Office is representing the state agencies named in the lawsuits, and said they cannot comment on pending litigation.

Smith-Bolden is seeking an injunction to keep the Social Equity Council from voting on any more applications while the legal process plays out. It’s unclear when a judge could rule on that.

The council is scheduled to meet on Friday, August 19 to consider a number of lottery applications.

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