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Legal Mistakes for Cannabis Businesses


Connecticut Innovations, the state’s parastatal private equity arm, has invested in a Colorado-based marijuana retail company called 1906, which specializes in fast-acting edibles, and is expanding in Connecticut. However, cannabis activists and would-be entrepreneurs in the state are not favorable to the investment as they see it as the state giving money to an already established multi-state organization as they navigate the state social equity rules and compete for a small market. number of licenses.

In a statement from Lauren Carmody, Connecticut Innovations’ vice president of marketing and communications, in February of this year, the company invested $1.25 million in 1906. The transaction was part of the third round of capital funding for Connecticut Innovations, totaling $33.4 million. to 1906 since 2017.

Cannabis business owners react to investment

The Connecticut Innovations investment, however, sparked heated exchanges between 1906 CEO Peter Barsoom and former Minority Cannabis Business Association president Jason Ortiz in an online forum hosted by Arcview.

In the conversation, Peter Barsoom began by saying that he had not yet sent in his application for a cannabis license in Connecticut and stated that he intended to apply for multiple licenses, however.

Even if his organization would only be eligible for the most expensive general licenses. the Connecticut law authorizes 1906 to team up with social equity seekers, possibly occupying some of the social equity slots.

Ortiz said there was no way to get money from the Connecticut legalization system should be used to help people from other states obtain licenses. He added that it is quite ridiculous in the sense that if he applies for the same lottery license, they will be able to afford to put in a thousand lottery tickets. He can only put ten, that they will use the Connecticut innovation funds to force him out.

Carmody, on the other hand, believes Connecticut Innovations’ investment is a statement to the market that they are ready to invest in cannabis and that 1906 created a presence in Connecticut by filing with the office of the Secretary of State. .

Carmody explained that this was not a unique situation and that they had the opportunity to further investigate the cannabis trade and increase their investment. This is the first of what could be a lot for us, he added.

The battle for marijuana licenses is intense, as there are only 56 licenses available for a variety of marijuana-based services. Over 3,000 social equity license applications and over 1,600 general license applications have been received by the Department of Consumer Protection.

Those who apply are then put through a lottery that will decide who gets provisional permission to begin producing, selling, or distributing recreational cannabis in the state.

Even though much of the enabling legislation’s language focused on equality for populations that have been disproportionately disadvantaged by previous marijuana regulations, some argue that the law still favors larger and larger cannabis companies. established and those who cultivate cannabis for medical purposes.

Since the odds are so low, the idea that Connecticut’s venture capital arm would invest money in a non-state company with ambitions to obtain a license creates unease. .

When Ortiz was approached for comment, he said: ‘It had become very clear that Governor Lamont had never intended to allow anyone but his wealthy friends to own the entire market. cannabis.” He’s used the suffering of poor communities to establish one more way for those who are very wealthy to own everything in Connecticut, down to programs that are only for working-class families, Ortiz added.

Connecticut Innovations, according to Carmody, looks at the issue strictly from an investment perspective, looking at the management team, the ability to create jobs, and the potential for return on investment, and 1906 ticked all three boxes.

Carmody also said they were evaluating it from an investment perspective and found there was more potential there. He said it was just the beginning for them, not the end, and they wanted to explore it more.

With the exception of social equity seekers and cannabis activists in Connecticut, the law as it currently stands causes more hassle and inequity for people trying to access this growing market. Ortiz said the whole situation was pretty sickening to watch unfold.

What led Connecticut Innovations to invest in 1906?

In a statement, Lauren Carmody, vice president of marketing at Connecticut Innovations, said that in addition to their belief in the future potential of 1906, Connecticut Innovations’ investment recognizes the growing importance of the cannabis business in health. , the economy and the health of the state. social development.

With its history of success and innovation, 1906 is a great addition to Connecticut Innovations’ growing portfolio.

The investment will help accelerate the company’s ambitious expansion plans and establish 1906 as the pioneer for many Connecticut-based marijuana industry leaders.

According to the Connecticut Innovations team.

The investment aligns with Connecticut Innovations’ mission to encourage innovation and diversity in the state and supports efforts to focus on public health, public safety, equity and social justice.

Conclusion

Connecticut Innovations’ 1906 investment is a milestone for the cannabis industry, and institutional investors no longer need to wait for federal regulatory changes before investing in the cannabis market (or funding the expansion of industry); 1906 CEO Peter Barsoom said. Connecticut Innovations’ investment will help 1906 grow its business in the state and put 1906 at the epicenter of the Northeast’s cannabis boom at the perfect time.

The arrival of 1906 and their products in Connecticut is quite exciting (at least for the company), despite the disapproval of cannabis activists and business owners in the state.



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