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  • March 22, 2022

Connecticut Cannabis License Application

The state of Connecticut legalized cannabis last summer, with recreational sales expected to begin in mid-to-late 2022. The Connecticut Department of Consumer Protection released the first set of cannabis license applications last month using its online platform, eLicense. This is the initial step in the state lottery for people who are interested in acquiring a license to operate a recreational, adult-use retail facility and other types of cannabis businesses.

Applying for a cannabis license in Connecticut is fairly straightforward, but actually getting that license is a long shot. It’s called a lottery for a reason. There are different aspects of the process to touch on, but the main takeaway is to just get started as soon as possible.

Time is Crucial

The cannabis license process is extremely detailed and the window for lottery applications will close beginning on May 3. In addition to applying for the entity license itself, all financial backers with a minimum 5% ownership stake — including any spouses who own more than 5% together — must also complete a separate application. The license application is not complete until all the backers submit their own individual backer applications.

You will need to get a significant amount of information directly from your backers. And that takes time. Social equity applicants (SEA), for example, will need to collect résumés for all owners, officers and key personnel showing places of employment and corresponding dates, as well as three years of federal tax returns for each backer.

Social equity applicants may also need to go a step further to prove the validity of their SEA status, which might require old utility statements or school records to establish certain residency requirements. These aren’t necessarily easy-to-find documents and will require time to track down. It’s also helpful to create an eLicense account in advance, as it can take a day or two to authenticate.

Fill in the Gaps

One handy trick during the application process is to create filler sheets. When you begin the eLicense process you may not have certain documents ready to upload, but you can’t move to the next step in the application without uploading something.

Create a placeholder document so that you can keep making progress on the application. Just don’t forget to replace all placeholders before finalizing your application.

Finding a bank

Applicants need to submit banking authorization and signatory cards. This process is tricky, because there just aren’t many financial institutions that support the cannabis industry. You may need to consult with financial advisors or attorneys with experience in this area in order to identify institutions that will work with you.

As long as cannabis remains federally illegal, most of the big banks will keep their distance. Some credit unions and specialized financial institutions are welcoming cannabis, but the fees and interest rates may be high.

Because there is a 90-day window for each application, start that process now. A lot of the banking processes can take anywhere from 30 to 60 days for new customers.

Get Certified

It sometimes takes days to obtain certified copies of your formation documents from your applicable jurisdiction, and it can be costly if they need to be expedited.

Applicants also need a certificate of good standing, which shouldn’t be too difficult in Connecticut but may take longer to order from other jurisdictions.

First things first

Now is not the time to pour a ton of energy and effort into the business plan and finding a location for a brick-and-mortar location, unless you're applying for a non-lottery cultivator license located in a Disproportionately Impacted Area or working on a joint venture with a cultivator or dispensary. While a business plan is necessary to attract investors, and you’ll want to find an optimal location eventually, it’s not the priority until you win the lottery.

There is a great deal of competition among prospective applicants for space in communities that are welcoming cannabis businesses. But you don’t need to have a lease or all the operational elements in place to apply for a license. Bury yourself in the application, and don’t worry so much about what the business is actually going to look like. This will, and probably should seem backward for a lot of people.

Don’t Count on It

The success rate for the lottery participants will be low, so don't have high expectations (no pun intended). Part of the reason is a matter of supply and demand, but there also isn’t a limit on the number of applications one can submit. Entities with strong financial backing may try the shotgun approach. There is, however, a limit on the number of licenses one can be awarded, so perhaps this will help diversify the lottery awardees.

At this stage, investing the minimum amount necessary in order to submit an application for the lottery is the practical approach.