MJBizMag January 2022 - 40

OPEN FOR
BUSINESS
* Conditional licenses that make
it possible for businesses to
get licensed gradually, thereby
reducing the amount of capital
needed at the front end of the
licensing process.
* Relatively low application and
licensing fees, reducing an early
barrier to entry.
THE BIG COMPETITORS
That said, it won't be easy competing
against existing dispensary operators
in Connecticut, including multistate
operators Acreage Holdings, Curaleaf,
Green Thumb Industries, Trulieve
Cannabis and Verano.
Although social equity applicants
get priority, existing dispensaries can
convert to hybrid retailer licenses,
which allow them to sell medical and
recreational products without going
through the lottery process.
Large operators that dominate
the state's cultivation sector now are
expected to continue to do so for
the first few years of the adult-use
program. Only four medical marijuana
cultivation licenses were issued,
one to Curaleaf and three to private
operators that are now owned by MSOs
Verano, Green Thumb Industries and
Greenrose Acquisition Corp., a special
purpose acquisition company that
acquired Theraplant in March 2021.
Pablo Zuanic of New Yorkbased
investment banking firm
Cantor Fitzgerald wrote in an investor
note: " We believe the four existing
med cultivators will grab the lion's
share of the rec wholesale market
initially, at least for the first couple
of years. "
Patrik Jonsson, Curaleaf's regional
president for the Northeast, agreed.
" The current operators will have
enough to supply the current medical
market. Then the question becomes,
how much additional supply will be
needed for adult use, " Jonsson said. " I
think we can supply the early market
relatively well. As the market matures,
40 January 2022 | MJBizMagazine
it's going to be important for new
operators to come online. "
SMALL-BUSINESS TOOLS
While Connecticut's established
medical operators will initially have
the market to themselves, social equity
and small businesses are provided
mechanisms to ease entry into the
market.
This includes relatively low
application and licensing fees,
microbusiness licenses and
prioritization for social equity
applicants.
Another mechanism is a two-step
licensing process that awards lotterywinning
applicants with a provisional
license that is good for 14 months, at
which time an applicant must apply
for a final license. Regulators hope the
provisional licenses help businesses
avoid getting locked into real estate,
Michelle Bodian, a senior associate
attorney with Vicente Sederberg's
Boston and New York offices, told
MJBizDaily.
WHOLESALE OPPORTUNITY
New and existing operators will find
both opportunity and necessity in the
wholesale market because operators
aren't allowed to own more than two
storefronts.
" Our goal-and the goal of many
of the operators-is to make sure
that we can offer wholesale product
to new operators looking to get into
manufacturing and retail, because we
are going to be limited to the number of
retail outlets we can have, " Jonsson said.
Ward from Verano agreed. " One of the
opportunities we've seen is supplying
partners with biomass-raw material
that they can process themselves, " he
said. " There are only four growers in
the state currently. So even on the craft
grow side, there's always going to be
tremendous opportunity. "
Ward added that craft growers
will find their product in demand
by MSO-owned stores because they
will be aiming to diversify their retail
offerings. " On the craft grow side, we'd
love to have some of that product. So
that's definitely a big opportunity, "
Ward said.
MANUFACTURING BRANDS
Another potential opportunity is in creating
a manufactured brand using biomass
bought from growers at wholesale.
" In theory, the margins are pretty
good, because you can buy biomass or
finished oil relatively cheap. ... If you've
got an idea for a brand and execute,
we've seen that be very successful, "
Jonsson said. " And you can do that for
a lot less money than what cultivation
would run you. "
One such example is Levia, a
Massachusetts infused seltzer
company that is the No. 1 infused
beverage in the country, according to
Leaflink. Levia recently was acquired
by Ayr Strategies.
BEST REAL ESTATE
Retailers should also do well in a state
that perennially boasts some of the
highest median household incomes in
the nation.
Observers say many people are
interested in the densely populated
and often wealthy suburbs, towns along
trainlines, the state capital of Hartford
and the New Haven area, home to
about 20 universities, including Yale.
Businesses interested in
Connecticut's adult-use marijuana
market should check with local
governments to see if they will be
allowing adult-use sales.
Officials announced that residents
of 35 Connecticut cities and towns will
receive priority for recreational
marijuana business licenses as part
of the state's social equity program.
According to the Hartford Courant,
more than 200 of the state's 833 census
tracts fall under the definition of
disproportionately impacted by drug
prohibition, based on drug conviction
and unemployment rates.
MJBizMag January 2022

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