Connecticut Adult-Use Sales Begin January 10 with Quarter-Ounce Limit

Adult-use sales of cannabis are about to commence in Connecticut, but the launch will come with its own uncertainties as the state attempts a supply-and-demand balancing act that may be wishful thinking on its part. The agency overseeing the rollout, the Department of Consumer Protection (DCP) announced two weeks ago the start date of the program, and its parameters.

“The Connecticut Department of Consumer Protection has notified licensed hybrid retailers that they may begin selling cannabis products to all adults 21 and over beginning no earlier than 10 a.m., or as local zoning permits, on Tuesday, January 10, 2023,” the DCP said in a statement. It listed nine medical cannabis dispensaries statewide that had been notified that “they successfully completed the necessary steps for conversion to a hybrid license and may begin selling cannabis products to all adults 21 and over.”

To meet the needs of the expanding market, DCP reported that “all existing medical marijuana producers have met the requirements for an expanded license that allows them to supply both the adult-use cannabis and medical marijuana markets. The law requires at least 250,000 square feet of growing and manufacturing space in the aggregate be approved for adult-use production before retail sales can begin at licensed retailers, including hybrid retailers. With all four producers successfully converted, the 250,000 square-foot threshold has been met.”

One of those producers may not make it to harvest, however. Theraplant, which is owned by New York-based multistate operator, Greenrose Holding Co., which reported in its most recent Form 10-Q, “As of September 30, 2022, we maintained a cash and cash equivalents balance of $962 thousand and $4 thousand of restricted cash, with $135,638 thousand working capital deficit, and we did not have adequate working capital resources to satisfy our current liabilities. As a result, after taking into account the Company’s cash flow projections, we do not believe the Company will have sufficient cash on hand or available liquidity to meet its obligations in the upcoming reporting periods, and we have substantial doubt regarding our ability to continue as a going concern.”

That said, the company also reported, in the Nov. 14 SEC filing, “Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand and private financing… Theraplant and True Harvest are generating cash from sales and Theraplant is deploying its capital reserves to acquire and develop assets capable of producing additional revenues and earnings over both the immediate and near term to support its business growth and expansion.”

But even if Theraplant never delivers an adult-use cannabis plant, and the 250,000 square foot threshold of production is not met, the program will continue, reported the Hartford Business Journal. “Once sales begin they will not close,” the DCP told the Journal this week.

To ensure there is enough cannabis flower to meet the anticipated adult-use demand, however, individual transactions are being limited to a quarter ounce of flower or its equivalent. Per the state:

Different types and sizes of products may be purchased together up to a total of 1/4 ounce of cannabis flower or its equivalent per transaction. Examples of what 1/4 of an ounce of cannabis flower or its equivalent might look like include:

• Up to 7 pre-rolled cigarettes that weigh 1 gram each, or 14 pre-rolled cigarettes that weigh 0.5 grams each. Or any combination up to 7 total grams, which equals 1/4 ounce.
• Two to four vape cartridges, which come in .5 mL and 1 mL sizes.
• Edibles vary by type and size. A standard-sized brownie or cookie can be the equivalent of .08 grams of cannabis flower. One edible serving cannot have more than 5 milligrams of THC.
• A combination of different product types that collectively amount to no more than ¼ of an ounce.

The idea, of course, is to not run out of cannabis, which has happened previously in markets with underproduction upon launch, and then not to overproduce as the market matures. Achieving that while also maintaining a competitive marketplace that can compete with the black market and still serve the medical market is the aforementioned balancing act, which even the DCP knows will be off kilter in the weeks following January 10.

“Patients in the Medical Marijuana Program are advised to purchase any necessary medication prior to January 10,” it warned, “or at one of the nine medical-only dispensaries in the state, as long lines and traffic are expected around the hybrid retailers during the opening weeks of adult-use sales.”

Connecticut will also lose two cannabis regulators as the adult-use program gets underway a year and a half after it was passed into law. “Governor Ned Lamont today announced that Commissioner Michelle Seagull is planning to step down from her position at the Connecticut Department of Consumer Protection (DCP) early next year to pursue other professional opportunities,” announced the governor’s office. “Commissioner Seagull will remain in the position over the coming weeks to oversee the successful launch of Connecticut’s adult-use cannabis retail market and assist with the transition needs of the agency and administration. She intends to depart the agency during the first quarter of 2023.”

That announcement comes two days after DCP deputy commissioner Andrea Comer, who is also chair of the state’s cannabis Social Equity Council, said she would be leaving before the launch of adult-use sales. “The Hartford resident and former city and state board of education member will exit her two roles overseeing the cannabis market next week and join incoming state Treasurer Erick Russell as chief of staff on Dec. 30,” reported CT Insider.