Fresh off its passage by the General Law Committee, a substitute for HB5150 – An Act Concerning Cannabis and Hemp Regulation – received a favorable report by the Legislative Commissioner’s Office of the Connecticut General Assembly on Tuesday, and was added to the House Calendar as Item No. 152.  It will be ready for consideration by the House when it receives a second X on the daily calendar. It currently has one X. The bill, which is now called File No. 199, is basically the same compilation of changes to current law that was met with passionate opposition during a public hearing in February. The substitute was approved by GL in a 21-1 vote in March.

File No. 199 contains analysis of the bill by the Office Legislative Research (OLR), which is tasked with providing nonpartisan, objective research to lawmakers on pending legislation. The analysis, which is tacked-on towards the end of the substitute bill (starting on page 99), includes the following summary of changes to the law, which are effective July 1, 2024.

This bill makes various changes to the laws around adult-use cannabis, hemp, and medical marijuana. Among other things, it:

1. Establishes a new category of high-tetrahydrocannabinol (THC) product, which it classifies as an “infused beverage” and requires it to meet many of the requirements for manufacturer hemp products (i.e., intended for human ingestion, inhalation, absorption, or other internal consumption) and prohibits sales to anyone under age 21;
2. Generally lowers the amount of THC for a product to be considered a high-THC hemp product and removes the differing thresholds depending on the type of product, instead setting a uniform threshold;
3. Requires each cannabis establishment to submit marijuana (i.e., cannabis) samples to a cannabis testing laboratory for testing;
4. Allows certain social equity cultivator applicants to (a) partner with hemp producers to receive either a cultivator or micro-cultivator license that allows cultivation outside a disproportionately impacted area, (b) apply for a micro-cultivator license, and (c) locate an exclusively outdoor grow facility outside a disproportionately impacted area;
5. Expands what is considered a disproportionately impacted area to include state tribal reservations and other land tribes own;
6. Expands what certain licensees (e.g., a product packager allowed to do product manufacturer activities) can do under their licenses and allows them to apply to the Department of Consumer Protection (DCP) to do expanded activities;
7. Expands the DCP and revenue services commissioners’ powers to summarily suspend a credential for certain violations;
8. Allows edible cannabis products to be packaged for multiple servings under certain requirements and requires DCP to establish disclosures and signs for mold and yeast;
9. Generally prohibits cannabis establishments from advertising or marketing a discounted price or other promotional offer to buy cannabis;
10. Limits the amount of THC in manufacturer hemp products and requires it to be sold in establishments that only sell other hemp products; and
11. Makes various other minor, technical, and conforming changes.

Below are some of the specific changes included in the bill:

INFUSED BEVERAGES

The bill establishes a new category of THC product, which it classifies as an “infused beverage” and requires it to meet many of the requirements for manufacturer hemp products. It prohibits sales of these beverages to anyone under age 21.

An “infused beverage” is a beverage that is not alcoholic; is intended for human consumption; and is advertised, labeled, or offered for sale as having a total THC content of less than 2.5 milligrams (mg) per container that is at least 12 fluid ounces. It is not considered cannabis, marijuana, or a high-THC product.

Age Requirement.

The bill prohibits infused beverages from being sold to anyone under age 21. It does so by prohibiting a package store owner, agent, or employee; dispensary facility, hybrid retailer (i.e., licensed to sell both recreational cannabis and medical marijuana), or retailer from selling these beverages without first verifying the consumer’s age with a valid driver’s license or identification card.

Sales and Sign Requirements.

Under the bill, an infused beverage may only be sold and distributed if it is sold at a package store that buys from a wholesaler, dispensary facility, hybrid retailer, or retailer. If sold at a dispensary, hybrid retailer, or retailer, the beverage must be stored and displayed separately from cannabis in the same way as manufacturer hemp products (i.e., displayed with a DCP-approved sign, clearly labeled to distinguish them as a different product, and subject to different testing standards).

Standards.

Infused beverages must also meet certain standards of manufacturer hemp products. These standards prohibit these beverages from:

1. having any synthetic cannabinoid;
2. being packaged, presented, or advertised in a way that is likely to mislead a consumer (e.g., using a statement or depiction that resembles cannabis or implying it is a cannabis product); and
3. being distributed or sold without certain packaging and labeling (e.g., scannable bar code and product expiration or best by date if applicable).

Packaging and Labeling Requirements.

The bill prohibits these beverages from being sold in packages that have more than two containers.

It also requires each beverage container to prominently display a symbol of at least one-half inch by one-half inch in a DCP commissioner-approved format that indicates the beverage is not legal for sale to people under age 21.

Container Assessment

The bill requires a 50-cent assessment on every infused beverage container sold that must be remitted to DCP every six months for certain public health and safety purposes.

Under the bill, a cannabis establishment (i.e., dispensary facility, hybrid retailer, or retailer) and alcohol liquor wholesaler permittee or beer wholesaler permittee must assess this on each container sold. For cannabis establishments, it is on sales to a consumer. For wholesalers, it is on sales to a package store. These assessments are not subject to any sales tax or treated as income tax.

HIGH-THC HEMP PRODUCTS

The bill generally lowers the amount of THC for a product to be considered a high-THC hemp product and classifying it as marijuana or cannabis, subjecting it to various licensing and regulatory requirements (e.g., it must be sold only by licensed establishments, tested, and sold only to those age 21 or older except under the medical marijuana program). It also removes the differing thresholds depending on the type of product and instead imposes a uniform threshold.

Under the bill, the new THC thresholds are 2.5 mg per container of any manufacturer hemp product or 0.3% on a dry-weight basis for cannabis flower or cannabis trim.

Under current law the thresholds are:

1. for a hemp edible, topical, or transdermal patch: (a) one mg on a per-serving basis or (b) five mg on a per-container basis;
2. for a hemp tincture, including oil intended for ingestion by swallowing, buccal administration (i.e., between the gums and mouth cheek), or sublingual absorption (i.e., placing under tongue to dissolve): (a) one mg on a per-serving basis or (b) 25 mg on a per-container basis;
3. for a hemp concentrate or extract, including a vape oil, wax, or n shatter (a type of cannabis extract): 25 mg on a per-container basis; or
4. for a manufacturer hemp product not described above: (a) one mg on a per-serving basis, (b) five mg on a per-container basis, or (c) 0.3% on a dry-weight basis for cannabis flower or cannabis trim.

MARIJUANA TESTING

Testing Samples

The bill requires each cannabis establishment to submit marijuana (i.e., cannabis) samples to a cannabis testing laboratory for testing, as required by this provision. By law, a cannabis establishment is a producer, dispensary facility, cultivator, micro-cultivator, retailer, hybrid retailer, food and beverage manufacturer, product manufacturer, product packager, delivery service, or transporter.

Under the bill, a cannabis testing laboratory must test each marijuana sample for (1) microbiological contaminants, mycotoxins, heavy metals, and pesticide chemical residue and (2) an active ingredient analysis, if applicable. The microbiological testing must include, as a minimum, testing for the Aspergillus species, as set, and posted on DCP’s website. (Presumably, DCP will set acceptable limits for all of these tests.)

Testing Methods

When conducting the microbiological testing, the marijuana sample must be tested using a molecular method that:

1. includes quantitative polymerase chain reaction;
2. is certified for identifying microbiological DNA; and
3. is approved by the Association of Official Analytical Collaboration International, or a comparable national research and standard-making agency the DCP commissioner designates.

The bill also allows alternative testing methods if DCP approves them and posts them on the department’s website.

Repeat Testing After Failure

Under the bill, if a sample does not pass the testing, the cannabis establishment that submitted the failing sample must repeat testing on the marijuana batch where the sample was taken, in a DCP-approved way. If the repeat test provides satisfactory results, the entire batch may be released for sale.

The bill also allows a cannabis establishment to submit a remediation plan that is sufficient to ensure public health and safety to the commissioner and, if he approves it, the establishment may remediate the batch where the sample was taken and repeat the testing in a DCP-approved way. If all the repeat testing provides satisfactory results, the entire batch may be released for sale.

Disposing of Batches

If a cannabis establishment does not retest, or if repeat laboratory testing does not provide satisfactory results, the establishment must dispose of the entire marijuana batch where the sample was taken according to DCP commissioner-established procedures, as published on the agency’s website.

Marijuana Batch Size

The bill sets the maximum quantity and number of marijuana samples to be sufficient to ensure representative sampling of the corresponding batch size. The size of the corresponding marijuana batch size must not exceed the lesser of:

1. 25 pounds or
2. a smaller marijuana batch size, if the DCP commissioner (a) has determined the smaller size is needed to protect public health and safety and (b) posts the smaller size on DCP’s website within 30 days before the first date the commissioner requires the smaller size.

SOCIAL EQUITY APPLICANTS PARTNERING WITH HEMP PRODUCERS

The bill provides an additional option for certain social equity cultivator applicants by allowing them to partner with hemp producers to cultivate outside a disproportionately impacted area.

By law, DCP opened a three-month application period for social equity applicants to apply for a provisional and final cultivator license for a facility located in a disproportionately impacted area without participating in a lottery or request for proposals.

The bill sets a time period of between July 1, 2024, and December 31, 2025, for these social equity applicants to partner with a hemp producer to receive a cultivator or micro-cultivator license that may grow outside a disproportionately impacted area, under certain conditions.

Under current policies and procedures, among other things, cultivators must have a grow space and outdoor grow space of between 15,000 and 250,000 square feet in the aggregate, and micro-cultivators must have between 2,000 and 10,000 square feet in the aggregate, before any authorized expansion.

Conditions for New License

To qualify under the bill, the social equity applicant must have submitted an application before July 1, 2024, and also reapply under the terms of the bill between July 1, 2024, and March 31, 2025.

Applied for Prior License.

The bill requires a social equity applicant to have submitted a completed cultivator application to locate the cultivation facility in a disproportionately impacted area before July 1, 2024. Additionally, the applicant must have been either:

1. verified by the Social Equity Council to have met the social equity applicant criteria or
2. issued a provisional, but not final, cultivator license by DCP.

Applying for New License With Hemp Producer.

The bill requires the applicant to (1) apply to DCP between July 1, 2024, and March 31, 2025, by submitting a completed application for a new cultivator or micro-cultivator license on a DCP-prescribed form and (2) meet the bill’s requirements.

The bill requires the applicant to submit:

1. a copy of the agreement between the applicant and a hemp producer that has been continually licensed as a hemp producer since January 1, 2023 (see below);
2. an acknowledgement from the applicant and a separate acknowledgement from the hemp producer of the steps that take place after the license is issued (see below);
3. evidence that is sufficient for DCP that the hemp producer has been continuously licensed since January 1, 2023;
4. a written statement from the applicant disclosing whether he or she have had any change of ownership or control since being verified by the Social Equity Council as a social equity applicant; and
5. the application fee, which unless the applicant has already received a provisional cultivator license or paid the fee, is either (a) $3 million for a cultivator license or (b) $500,000 for a micro-cultivator license.

Requirements of Hemp Producer Agreement.

The agreement must require the use of the hemp producer’s cultivation lot, which may be located outside of a disproportionately impacted area. It must also provide that if DCP issues a provisional cultivator or micro-cultivator license to the applicant the:

1. provisional license automatically replaces both the provisional cultivator license application the applicant submitted and any provisional cultivator license DCP may have issued, and both are immediately deemed to have been automatically withdrawn or surrendered, and
2. hemp producer must immediately be deemed to have automatically surrendered his or her hemp producer license.

Changes to Social Equity Status.

Under the bill, if applicable, if the applicant provided a written statement on changes in ownership or control, the Social Equity Council must determine if the changes are allowed under the laws and regulations governing its application review process. Additionally, the council must also review the agreement between the applicant and hemp producer.

For both reviews, the council must determine whether the applicant continues to meet the social equity applicant criteria and submit to DCP a written notice disclosing its determination.

Harvesting Hemp.

Before a new license may be issued, the bill requires all hemp to be harvested from the cultivation lot. All harvested hemp continues to be deemed hemp until DCP issues a final cultivator or micro-cultivator license to the applicant. (Hemp and cannabis are regulated under different laws in Connecticut.) After the final license is issued, the harvested hemp is deemed cannabis and subject to all cannabis cultivation, testing, labeling, tracking, reporting, and manufacturing laws that apply to cultivators and micro-cultivators.

License Renewal Fee

Under the bill, a renewal fee for a final cultivator and micro-cultivator license are the same as existing law (i.e., $75,000 for cultivators and $1,000 for micro-cultivators). All of these fees must be deposited in the Cannabis Social Equity and Innovation Fund. By law, this fund may be used as access to capital for businesses, technical assistance for start-ups, workforce education and community investment funding, and paying costs for regulating cannabis (CGS § 21a-420f).

HEMP MANUFACTURER GETTING A PRODUCT MANUFACTURER LICENSE

The bill allows a hemp manufacturer to get a product manufacturer license from DCP. By law, a product manufacturer may:

1. perform cannabis extractions, chemical synthesis, and all other manufacturing activities the DCP commissioner allows and publishes on DCP’s website;
2. package and label cannabis manufactured at its establishment subject to its license; and
3. sell, transfer, or transport its own products to a cannabis establishment, laboratory, or research program if the transportation is done using its own employees or a transporter.

Under the bill, a product manufacturer may also get cannabis from a cannabis establishment, laboratory, or research program.

License Requirement

The bill requires DCP to issue a product manufacturer license to a hemp manufacturer if:

1. the manufacturer (a) has a DCP hemp manufacturer license; (b) continually held this license since January 1, 2022; and (c) is not a Department of Agriculture licensed hemp producer;
2. during the period between July 1, 2024, and December 31, 2024, the manufacturer submits a completed application to DCP with a $25,000 application fee as well as social equity and workforce development plans approved by the Social Equity Council; and
3. the manufacturer submits an acknowledgement that if DCP issues a final license to the manufacturer, the manufacturer will immediately be deemed to have automatically surrendered its hemp manufacturer license.

Hemp

The bill allows a provisional product manufacturer licensee to maintain an active hemp manufacturer license, provided the manufacturer must immediately be deemed to have automatically surrendered the hemp manufacturer license when DCP issues a final license.

Under the bill, hemp and hemp products in the manufacturer’s possession continues to be deemed hemp while he or she has an active hemp manufacturer license. But once DCP issues the final product manufacturer license and the hemp manufacturer license is automatically surrendered, all of these hemp and hemp products are deemed cannabis and subject to all applicable laws and regulations.

Fees

As under existing law, each final product manufacturer license and renewal fee is $25,000. These fees are nonrefundable and must be deposited in the Cannabis Social Equity and Innovation Fund.

Application Process

The bill requires each complete application to be processed like a product manufacturer application selected through the lottery and subject to certain similar application requirements and procedures (e.g., limited disclosure of application information, no backers being added during certain periods, and how provisional and final licenses are issued).

Sufficient Cause

Existing law allows the DCP commissioner, for sufficient cause, to suspend or revoke a license or registration, issue fines of up to $25,000 per violation, accept an offer in compromise, refuse to grant or renew a license or registration, place a licensee or registrant on probation, place conditions on a licensee or registrant, or take other actions the law permits. The bill deems violations of any of the bill’s product manufacturer provisions as sufficient cause.

File No. 199 can be found here. Analysis of the bill by OLR starts on page 99.

UPDATE

File No. 199 is marked XX in the House Calendar for April 5, making it ready for House action when it convenes.

Another related bill, a substitute for HB5235, now titled File No. 102, is #99 on the House Calendar. Passed by the General Law Committee in early March, it was reported out of the Legislative Commissioners’ Office with a favorable report on March 25, with an analysis by OLR, which reads, in part:

This bill effectively prohibits “synthetic cannabinoids” by requiring the Department of Consumer Protection (DCP) to classify it as a schedule I controlled substance (i.e., a drug with no current accepted medical use and a high potential for abuse) and removing it from the statutory definition of “cannabis” and “marijuana.” The bill also redefines synthetic cannabinoids and prohibits cannabis establishments (see BACKGROUND) from selling them. Under the bill, synthetic cannabinoids are prohibited in cannabis.

The bill also redefines (1) “cannabis” and “marijuana” by removing the plant’s seeds from current law’s definition and (2) “manufactured cannabinoids” by specifying the process by which they are created rather than defining them based on their natural structure or the effect they have.

The bill also makes the following unrelated changes, it:

1. requires cannabis labeling and packaging information to comply with labeling requirements under both state and federal law, rather than either;
2. specifies that financial interest is what current law prohibits certain government individuals with oversight over cannabis from having; and
3. specifies that state hemp laws do not prohibit hemp that is lawfully produced under federal law from being shipped or transported through the state.

The bill also makes various minor, technical, and conforming changes.

EFFECTIVE DATE: Upon passage