Major Changes in Connecticut Cannabis Laws for 2024: A Comprehensive Guide for Small Businesses
As of July 1, 2024, Connecticut's cannabis and hemp industry has undergone significant transformations due to the implementation of new laws and amendments. This comprehensive guide, presented by the Connecticut Cannabis Small Business Alliance (CCSBA), provides an in-depth analysis of Public Act 24-76 (the "Act") and related legislation, outlining their impacts on cannabis and hemp businesses operating in the state.
Public Act 24-76 (HB 5150): Key Revisions and Industry Impacts
1. Equity Joint Ventures (EJVs)
The Act introduces a crucial change to support Disproportionately Impacted Area (DIA) cultivators:
- Social equity backers of DIA cultivators can now also serve as backers for the licensee's two authorized equity joint ventures (EJVs).
- This modification aims to enhance support for DIA cultivators and provide more opportunities for equitable participation in the cannabis market.
- The change is expected to strengthen the position of DIA cultivators and promote diversity within the industry.
2. Project Labor Agreements (PLAs)
The Act clarifies and expands requirements for Project Labor Agreements in large-scale cannabis projects:
- PLAs are mandatory for cannabis establishment construction or renovation projects exceeding $5 million.
- Key requirements include:
- Mandatory labor union signatories
- Applicability to related entities
- Licensees must ensure all related entities comply with PLA requirements.
- This measure aims to ensure fair labor practices and support local workforce development in the cannabis industry.
### 3. Advertising Restrictions
To maintain public health and safety standards, the Act imposes strict limitations on cannabis advertising:
- Advertising or marketing promotions are largely prohibited, with exceptions for:
- Dispensaries
- Retail establishments
- Delivery services
- Content on a retail facility's website
- These restrictions aim to prevent excessive promotion of cannabis products and protect vulnerable populations.
- Businesses must carefully review their marketing strategies to ensure compliance with these new regulations.
### 4. Section 149 "DIA" Cultivators
Significant changes have been introduced for DIA cultivators, offering new opportunities and imposing new requirements:
#### Transition to Micro-cultivation
- DIA cultivators can now transition to micro-cultivation for a $500,000 fee.
- This transition allows them to create one EJV.
- The amendment is designed to help struggling cultivators operationalize their licenses and increase product supply in the state.
#### Licensing Requirements
- DIA cultivators retaining their licenses must obtain a provisional license by December 31, 2025.
- This eliminates the previous indefinite licensure period, encouraging timely progress in establishing operations.
#### Cultivation Location Exceptions
New laws introduce exceptions to the requirement to cultivate within a DIA:
- Outdoor Growth: Cultivators opting for outdoor growth may do so in any municipality containing a DIA, provided:
- The land is zoned for farming or agriculture
- All relevant regulations are complied with
- Tribal Lands: Cultivation is now permitted on:
- Reservations of the Schaghticoke, Paucatuck Eastern Pequot, or Golden Hill Paugussett tribes
- Other land owned in fee simple by these tribes
- Requirement: The area must include at least ten acres of contiguous land
These changes provide more flexibility for cultivators while still supporting economic development in disadvantaged areas.
### 5. Redefining High-THC Hemp and Introducing New Categories
Effective October 1, 2024, significant changes will be implemented in the categorization of hemp products:
#### High-THC Hemp (Revised Definition)
High-THC Hemp will include:
- All manufacturer hemp products with a total THC content exceeding 1 mg/serving up to 5 mg/container
- Hemp flower or trim with a total THC over 0.3% by dry weight
- Infused Beverages are explicitly excluded from this definition
#### New Product Categories
1. **Moderate-THC Hemp**
- Includes manufacturer hemp products with 0.5 mg/serving to 5 mg of total THC per container
- Excludes Infused Beverages
- Starting January 1, 2025, only certified businesses can sell these products
2. **Infused Beverages**
- Non-alcoholic beverages with up to 3 mg of THC per 12-ounce container
- Only permitted licensees and licensed dispensaries or cannabis retailers can manufacture these beverages
These new categories aim to provide clearer regulations for different THC concentrations and product types, potentially opening new market opportunities while ensuring consumer safety.
## Regulatory and Operational Changes
### Administrative Requirements
Businesses must adapt to new administrative procedures:
1. **Certificate of Registration for Moderate-THC Hemp Products**
- Required for selling Moderate-THC Hemp products from January 1, 2025
- Application process opens January 1, 2025
- Fees range from $1,000 to $2,000
2. **Sales Threshold Requirements**
- Businesses must demonstrate that:
- At least 85% of their average monthly gross revenue was derived from Moderate-THC Hemp product sales
- It is likely that at least 85% of future revenue will come from these sales
3. **Retail Sales Limitations**
- Moderate-THC Hemp product sales are limited to specific establishments
- This may favor out-of-state producers and complicate in-state business operations
Businesses should start preparing now to meet these new requirements and consider how they might impact their operations and revenue streams.
## Public Act 24-115 (HB 5235): Additional Regulatory Measures
PA 24-115 introduces several important adjustments to the cannabis regulatory landscape:
1. **Synthetic Cannabinoids Ban**
- Prohibits the manufacture and sale of synthetic cannabinoids within Connecticut
- The Department of Consumer Protection (DCP) commissioner must designate synthetic cannabinoids as Schedule I drugs
2. **Enhanced DCP Authority**
- Empowers the DCP to regulate cannabis dosage, potency, and packaging
- This may lead to more stringent product standards and labeling requirements
3. **Hemp Transportation**
- Allows federally legal hemp to be transported through Connecticut, even if it doesn't conform to state law
- This provision facilitates interstate commerce while maintaining state-specific regulations
These changes reflect Connecticut's commitment to maintaining strict control over cannabis products while adapting to the evolving national landscape.
## Public Act 24-95 (SB 200): Social Equity and Product Regulations
PA 24-95 focuses on social equity initiatives and further refines product regulations:
1. **Task Force on DIA Cultivator and Hemp Producer Partnerships**
- Establishes a task force to study the effects of allowing partnerships between DIA cultivators and hemp producers
- This could lead to future policy recommendations and potential new business opportunities
2. **Sale Regulations Clarification**
- Provides clearer guidelines for the sale of Infused Beverages and Moderate-THC Hemp products
- Businesses should closely monitor these clarifications to ensure compliance
This act demonstrates Connecticut's ongoing commitment to social equity in the cannabis industry while also refining its regulatory approach.
## HB 5524: Bond Authorization and Tax Provisions
HB 5524 introduces several measures to support DIA cultivators and enhance industry oversight:
1. **Flexible Grow Space Requirements for DIA Cultivators**
- Allows DIA cultivators to start with smaller grow spaces of 5,000 square feet
- Requires expansion to 15,000 square feet by December 31, 2025
- Imposes a penalty of $500 per day for non-compliance after the deadline
2. **Enhanced Social Equity Council Oversight**
- Improves oversight mechanisms for the Social Equity Council
- Mandates that Social Equity Plans be approved within 30 days
- Provides significant relief to licensees who have struggled with timely approvals
These provisions aim to make it easier for DIA cultivators to enter the market while ensuring they scale up operations in a timely manner.
## Conclusion and Industry Outlook
The 2024 legislative session has brought about substantial changes to Connecticut's cannabis and hemp industries, reflecting the state's commitment to:
1. Stringent regulation of cannabis and hemp products
2. Promoting social equity in the industry
3. Adapting to evolving market conditions and product categories
Key takeaways for industry stakeholders:
- Stay informed about regulatory updates, particularly regarding hemp and infused beverage manufacturing and sales
- Prepare for new administrative requirements, especially for Moderate-THC Hemp product sales
- Consider the implications of new product categories and advertising restrictions on business strategies
- Monitor opportunities arising from changes in cultivation location requirements and potential partnerships between DIA cultivators and hemp producers
The DCP will need to update its policies to align with these amendments. Industry participants should maintain open communication with regulatory bodies and consider seeking legal counsel to navigate these complex changes effectively.
## Additional Resources and Support
For more information, guidance, or assistance navigating these regulatory changes, contact the Connecticut Cannabis Small Business Alliance at [CTCannabisAlliance.org](https://ctcannabisalliance.org).
### Stay Informed
To keep up with the latest news, insights, and regulatory updates in the Connecticut cannabis industry:
1. Subscribe to the CCSBA newsletter
2. Follow CCSBA on social media platforms
3. Attend industry events and webinars hosted by CCSBA and other reputable organizations
By staying informed and adaptable, Connecticut's cannabis and hemp businesses can navigate these regulatory changes successfully and contribute to the growth of this dynamic industry.
