Several new laws and amendments went into effect last week on, July 1, 2024, bringing major changes to the cannabis and hemp industry in Connecticut. Here's a detailed look at the primary bill, Public Act 24-76 (the “Act”), and several ancillary bills and what they mean for cannabis and hemp businesses.
Public Act 24-76 (HB 5150) : Key Changes and Impacts on the Cannabis and Hemp Industry
The Act, titled “An Act Concerning Cannabis and Hemp Regulation,” introduces significant amendments to Connecticut's cannabis statutes, affecting industry stakeholders profoundly:
1. Equity Joint Ventures
The Act clarifies that the social equity backer of a Disproportionately Impacted Area (DIA) cultivator can also be the social equity backer of the licensees two permitted equity joint ventures (EJVs).
2. Project Labor Agreements
The Act clarifies the requirements for Project Labor Agreements (PLAs) in cannabis establishment construction or renovation projects over $5 million, including mandatory labor union signatories and applicability to affiliated entities. Licensees must review their affiliated entities to ensure they are not subject to PLA requirements.
3. Advertising Restrictions
The Act prohibits most advertising or marketing promotions, except by dispensaries, retail establishments, delivery services, or on a retail facility’s website. This restriction aims to ensure compliance with Connecticut’s stringent regulations on cannabis product advertising.
4. Section 149 “DIA” Cultivators
Disproportionately Impacted Area (DIA) cultivators can convert to micro-cultivation for a $500,000 fee, allowing them to create one EJV. This amendment aims to support struggling cultivators in operationalizing their licenses and increasing product supply in the state. For a more detailed discussion of the conversion mechanics and requirements, see this article.
DIA cultivators that elect to retain their licenses must obtain a provisional license before December 31, 2025, thus removing the indefinite licensure period that had existed. The new laws also add exceptions to the requirement to cultivate within a DIA. Cultivators that opt to grow exclusively outdoors may do so in any municipality containing a DIA (but not within the DIA itself) if certain requirements are met, namely the land is zoned for farming or agriculture and the cultivation otherwise complies with all applicable regulations. Cultivators can also now grow on a reservation of the Schaghticoke, Paucatuck Eastern Pequot or Golden Hill Paugussett tribes or on other land owned in fee simple by those tribes as long as the land or reservation includes at least ten acres of contiguous land.
5. Re-defining High - THC Hemp; Introducing Infused Beverages & Moderate-THC Hemp
This portion of the Act, which goes into effect on October 1, 2024, revises the categorization of federally legal CBD products containing THC. Previously in 2023, the legislature created the High-THC Hemp category to protect consumers from intoxicating or misleadingly marketed hemp products. However, this led to the reclassifying some lawful CBD products as cannabis, thus requiring a cannabis license for production and sale and impacting hemp producers and retailers negatively.
The 2023 amendments defined High-THC Hemp based on total THC content in milligrams, differing from the federal Farm Bill's dry weight measure. The thresholds specified in 2023 were:
- Edibles, topicals, and transdermal patches: 1 mg/serving, 5 mg/container
- Tinctures: 1 mg/serving, 25 mg/container
- Concentrates: 25 mg/container
- Flower or trim: 0.3% THC by dry weight
Effective October 1, 2024, High-THC Hemp will be redefined to include all manufacturer hemp products including edibles, topicals, tinctures and concentrates that have a total THC content of more than 1 mg/serving up to 5 mg/container and Hemp flower or trim with a total THC exceeding 0.3% by dry weight. Infused Beverages (as discussed below) are excluded from the new definition.
Also beginning October 1, 2024, two new product categories are introduced:
- Moderate-THC Hemp: Includes manufacturer hemp products with 0.5 mg/serving to 5 mg of total THC per container, excluding Infused Beverages. Beginning January 1, 2025, only certified businesses can sell these products.
- Infused Beverages: Non-alcoholic beverages with up to 3 mg of THC per 12-ounce container. Infused Beverages can only be manufactured by permitted licensees and by licensed dispensaries or cannabis retailers.
Regulatory and Operational Impacts
Businesses must adapt to new administrative burdens, including proving sales thresholds to obtain a certificate of registration for Moderate-THC Hemp products. Effective January 1, 2025, only cannabis establishments and others holding a certificate of registration from DCP can sell Moderate-THC Hemp products. Businesses can apply for a certificate beginning on that date for a fee of $1,000 to $2,000, and any such business must demonstrate that at least 85% of average monthly gross revenue was derived from the sale of Moderate-THC Hemp products and it is reasonably likely that at least 85% of average monthly gross revenue will be generated from the sale of Moderate-THC Hemp products moving forward. The Act also restricts retail sales of these products to specific types of establishments, potentially favoring out-of-state producers and complicating in-state business operations.
Public Act 24-115 (HB 5235): Additional Amendments
PA 24-115 introduces several changes, including the prohibition of synthetic cannabinoids and empowering the Department of Consumer Protection (DCP) to regulate cannabis dosage, potency, and packaging. This bill mandates that the DCP commissioner designate synthetic cannabinoids as Schedule I drugs, effectively banning their manufacture and sale within the state. Additionally, it allows federally legal hemp to be transported through Connecticut, even if it doesn’t conform to state law.
Public Act 24-95 (SB 200): Social Equity and Product Regulations
PA 24-95 establishes a task force to study the effects of allowing partnerships between DIA cultivators and hemp producers. It also clarifies the sale regulations for Infused Beverages and Moderate-THC Hemp products.
HB 5524: Bond Authorization and Tax Provisions
HB 5524 includes provisions for DIA Cultivators to start with smaller grow spaces of 5,000 square feet. Any cultivator opting to start with this lesser grow space must expand to 15,000 square feet by December 31, 2025, or face a penalty of $500 per day. The bill also enhances oversight of the Social Equity Council and mandates that Social Equity Plans must be approved within 30 days. This 30-day timeline will provide significant relief to licensees who have struggled with receiving approvals in a timely manner.
Conclusion
The 2024 legislative session's changes reflect Connecticut's rigorous regulatory approach to cannabis and hemp products. The DCP will need to update its policies to align with these amendments, particularly concerning hemp and infused beverage manufacturing and sales. Industry stakeholders must stay informed and compliant with these evolving regulations.
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