Strong interest in recreational cannabis business in Norwich
Norwich — More than 100 people gathered in downtown Norwich on Friday evening to hear the nuts and bolts of the new recreational cannabis law, how to get into the business and how it could benefit the city financially.
Mayor Peter Nystrom greeted the collection of entrepreneurs, residents, city leaders and curious attendees by admitting he was a “naysayer” a couple years ago when the state considered legalizing recreational cannabis. “But I’m a realist,” the mayor said, accepting that the new law could benefit Norwich.
Kevin Brown, president of the Norwich Community Development Corp., said Friday’s forum — Cannabis Conversations: Starting Your Business in Norwich — should be just the first of many such forums. By next May, he said, the city should be open for retail sales, while other towns are shutting the door.
“We’re open for business,” he said. “We want to do this in Norwich. We’re not going to be a community that says, ‘go somewhere else.’”
Brown said estimates for municipal revenue start at about $1 million in 2023, rising to $6 million to $7 million by 2026. Nystrom said Norwich has an advantage, because the city has its own utility, Norwich Public Utilities, and city agencies would “meet you where you are” to assist with local permitting.
Chris LaRose, NPU general manager, said the utility offers electric, natural gas, water and sewer services, with electric rates 12% lower than commercial utility companies. NPU also launched an economic development rate that offers 13% discounts to new, large electricity users.
Cannabis businesses have an advantage in qualifying for state licenses in Norwich, a city disproportionately affected by past marijuana criminal prosecutions. The state Department of Consumer Protection, which will issue the state licenses, must reserve 50% of available licenses for “social equity applicants,” who also will receive a 50% discount on application fees.
Ginne-Rae Clay, executive director of the Connecticut Social Equity Committee, which will write licensing regulations on social equity applications, said in each of the license categories, there will be a lottery for the available licenses.
Social equity applicants must show that 67% of ownership resides in disproportionately affected communities.
Clay read some daunting statistics. A startup cannabis growing business could face costs of $60 million or more just to open the door, including $1.5 million for the application for just one type of license. License fees will vary per category, she said. Big banks cannot finance the business, because recreational cannabis is still not federally legal.
“We are flying this plane as we are building it,” she said, with license regulations expected in December. She was hired three months ago and was handed a 302-page law to manage. At present, she is a department of one.
One condition not yet set is how long the initial license applicant must retain the ownership, she said.
In response to comments that the $1.5 million nonrefundable application fee is exorbitant, Clay said the state wants to ensure that applicants are on sound business footing and will not fail for lack of initial financing. The lottery fee and license fee are due up front, she said, “before you click send" on the application.
“If you don’t have that money, then this may not be the business for you,” she said.
To fulfill the promise that the law will benefit disproportionately impacted neighborhoods, Clay said by 2023, her office is expected to receive between $60 million to $70 million to run the state social equity program. That could include reestablishing neighborhood revitalization zones and improvement efforts. Residents in affected cities will control the neighborhood revitalization, she said, “in a very, very grassroots way."
City governments won’t control the spending, “you guys will spend it,” she said, addressing resident attendees.
Bryan Murray, executive vice president of government affairs for cannabis investment company Acreage Holdings, said his firm is looking to partner with social equity applicants in Connecticut. He said the entire industry is watching Connecticut, because no state yet has succeeded in the social equity promises.
“If Norwich is open for business,” Wilson said, “so are we.”