PDF Testimony of Michelle Seagull Commissioner of Consumer ...

[Pages:6]Testimony of Michelle Seagull Commissioner of Consumer Protection

General Law Committee Public Hearing, March 22, 2019

HOUSE BILL 7371 "AN ACT CONCERNING THE RETAIL SALE OF CANNABIS"

Senator Fonfara, Senator Witkos, Representative D'Agostino, Representative Cheeseman and Honorable Members of the General Law Committee, thank you for the opportunity to offer testimony regarding House Bill 7371, An Act Concerning the Retail Use of Cannabis.

This bill would legalize the sale of cannabis for recreational use for adults and would create a Cannabis Control Commission within the Department of Consumer Protection (DCP) to regulate the industry. Governor Lamont and his administration support the legalization of adult, recreational use of cannabis. If legalization is approved in Connecticut, the administration will work closely and deliberatively in coordination with stakeholders and regional states to ensure that legalization will protect public health and safety, and that legalization will reverse the impact of current law on minority and disadvantaged communities. DCP would like to offer our support and guidance as you proceed with this proposed legislation.

Positive Aspects of the Bill

There are several provisions within this bill that DCP thinks are of significant importance and would encourage this Committee to continue to embrace. First, Governor Lamont wholly supports efforts to encourage full participation by people from communities that have been disproportionately harmed by cannabis prohibition and enforcement, so this bill's strong

emphasis on equity within the cannabis industry is critical. Ensuring the thorough and thoughtful implementation of these provisions will require substantial involvement by those with expertise in areas involving social justice and civil rights.

This bill avoids a rigid three-tier system and caps on licenses, which DCP believes is an appropriate path for an emerging industry as it will allow the market to evolve more naturally with local zoning restrictions ensuring growth is measured. The provisions to avoid marketing to children or making products attractive to children, like the restrictions now placed on the medical marijuana program, are also a consistent and valuable component to protecting our children.

We also commend this Committee for requiring more information about grow-at-home before making it legal in Connecticut. There are persuasive arguments on both sides of this issue, and the legislature should fully research how it would impact our state before proceeding.

Protecting Connecticut's medical marijuana program (MMP) is imperative to the health and wellbeing of the more than 30,000 patients who are now benefiting from marijuana based medicine. The provisions to protect the program, such as fast-tracking the dispensing of medicine and ensuring the continued production of patient-specific medicine, are important steps toward preservation of the MMP.

The Department appreciates the Committee's recognition that additional resources would be necessary to implement this legislation and would like to work with you, OPM and the Governor's office to ensure that the resources necessary are appropriated to implement this proposal.

Timeline for Launching

It is our understanding that the proponents of this bill aimed to draft language that would ensure an expeditious launch of an adult use recreational program; however, under the current language DCP approximates a two year timeline. The reasons for this estimated length of time are as follows:

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 The bill establishes a Cannabis Control Commission within DCP to regulate the entire program. The Governor must appoint four commissioners, three of whom with certain qualifications;

Once the Commission is appointed, it must establish an equity applicant status for potential owners of cannabis establishments and then design a licensing application process, which will require creating different licensing fees and establishing criteria for large, medium and small cultivation centers;

The Commission and DCP will also need to issue policies, procedures or guidelines to implement the program, including for operations for retailers, cultivation facilities, and product manufacturing facilities, and to establish the requirements outlined in Section 15 of this bill. To be enforceable, these requirements will need to be codified in law or regulation, which could take well over a year to enact;

Once regulations are in place and license applications are published, license applicants will need several months to apply after which the Cannabis Control Commission will need time to review the applications and issues licenses; and

Once the licenses are issued, it would take cultivators and product manufacturing facilities six months or more to be ready to open.

Importantly, while it appears that the bill intended to allow current MMP businesses to operate until others come online, they can't operate without retail cannabis licenses and, therefore, are subject to the same timeline as all other applicants.

Cannabis Control Commission The Cannabis Control Commission established in this bill would create a new division within DCP with five commissioners, including the Commissioner of DCP, and a minimum number of specified staff. As drafted, this Commission is tasked with a substantial job, and it appears that the four additional commissioners, who will be appointed by the Governor, will be volunteers rather than paid employees. Considering the amount of work the commissioners are being charged with, an unpaid, volunteer commission would be problematic.

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Additionally, the roles of the Cannabis Control Commission and DCP should be clarified to avoid unnecessary duplication and ensure efficiencies. As drafted, this bill would, in effect, create another entire department, rather than division, within DCP. This Committee should consider giving the Commission a more specific role such as focusing on the large task of defining equity applicants and awarding licenses. Also, because of some of the challenges equity applicants might face with gaining access to capital, it could be helpful to include a DECD representative on the Commission.

Other Issues to Consider

This bill gives municipalities the ability to "restrict in any manner the operation of a cannabis establishment." Municipal input is important in all of our licensing processes, and giving municipalities such deference will ensure that this program doesn't grow so quickly that there are oversupply issues. The Committee should, however, understand that such deference will likely result in a concentration of cannabis facilities in a smaller number of towns. Additionally, if the Committee intended to allow for MMP facilities to sell marijuana for recreational purposes while the program is being launched, local zoning restrictions might prohibit such sales in some locations.

Ownership requirements and restrictions in the current draft of this bill also need clarification. The bill doesn't contemplate what happens if an equity applicant sells their business to an individual or entity that would not qualify as an equity applicant. It is also unclear whether or not retailers can partially own other business types.

The bill also doesn't contemplate medical-only facilities, existing and new, and how they would exist with adult use recreational marijuana. Also, as this Committee is aware, there are several proposals in other committees to address the legalization of hemp in Connecticut. The hemp plant, which is a marijuana plant but with much lower concentrations of THC, also produces Cannabidiol (CBD), a very popular product in the MMP and one which is used medicinally and recreationally throughout the country. As the cannabis and hemp bills make their way through the legislative process, DCP and the administration seek to work with the legislature to ensure these potential statutes don't conflict or result in duplicative government oversight.

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Additionally, this Committee should consider the possibility that within the next few years, the federal government might legalize marijuana. Currently, this bill creates interstate commerce restrictions that already exist in federal law. The Committee may want to consider amending the language so that if the federal law changes, further statutory changes won't be necessary for Connecticut's adult recreational use program to operate on an interstate basis.

Conclusion and Recommendations

The Department appreciates the willingness of the proponents of this bill to accept our feedback and consider our recommendations. Based upon our thorough review of the bill as drafted we recommend the following changes:

Fully clarify which areas DCP has the statutory authority to enforce, and which areas DCP has authority to write regulations and then enforce;

Establish processes for the general public to obtain accurate information about the effects and impacts of consumption of cannabis, such as through training and licensing of retail employees. Unlike alcohol, which has an established dosing and effect structure that is commonly known and agreed upon internationally, cannabis has more variables in its dosing and effects;

Define medium and small cultivators and create a fee structure; Define cannabis extracts; Extend, by at least one year, the timeline for which the micro-business and grow-

at-home study is due (currently due on January 1, 2020); Provide DCP with the ability to inspect records and require cannabis

establishments to submit financial and operational reports to the DCP request, in a manner prescribed by the Commissioner; Provide DCP with more enforcement flexibility by allowing the issuance of penalties, particularly the ability to issue fines; Include language to allow for product recalls and better clarify that standards for extractions of chemicals need to be adopted and enforced; Provide more guidance about how "per-transaction" amounts should be determined, and equivalency for processed product should be calculated, how the

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legislature envisions allowing the transferring of products to research programs, and what the requirements are for signage at retail locations; Appropriate the sufficient funds for the Commission and DCP to hire staff for licensing, compliance and enforcement, and appropriate funds to hire entities with the necessary expertise to conduct the research and write the studies mandated in the bill; Clarify ownership requirements and restrictions and provide guidance to address the potential sale of equity businesses; Eliminate Section 12 in its entirety as suspension and revocation rules should not be tied to the Liquor Control Act; and Better clarify the role of the Cannabis Control Commission and eliminate potential for duplicative, inefficient functionality within DCP. Thank you again for the opportunity to provide input about this proposal. I am happy to answer any questions you may have.

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