Towns consider cannabis options

This is the second in a series on the legalization of cannabis in Connecticut.

NORTH CANAAN — As towns across the Northwest Corner have struggled to adjust to the COVID-19 pandemic and change the way they do business, they can add another major challenge: how to handle private business interests that want to enter the retail cannabis sector or grow it for the wholesale market.

Connecticut legalized adult-use marijuana sales last year, and the state has put in place some guideposts and incentives with potential revenue streams that could be game-changers for cash-strapped towns.

Municipalities are free to regulate cannabis businesses — medical or recreational — as they would just about any other businesses. According to an analysis by the nonpartisan state Office of Legislative Research, towns may prohibit them from opening, reasonably restrict their hours and signage, restrict their proximity to religious institutions, schools, charitable institutions, hospitals, veterans’ homes or certain military establishments.

According to the Litchfield firm of Cramer & Anderson, which provides legal services to several Northwest Corner towns, a key provision of the new law stipulates that cannabis establishments must be zoned just as similar businesses would be unless municipalities regulate them through their zoning codes or ordinances.

Under Connecticut’s law, possession of 1.5 ounce of cannabis is legal. Since October 2021, medical marijuana patients have been able to grow up to three mature and three immature plants at home starting, with a cap of 12 total plants per household. By July 1, 2023, all adults will be able to grow at home under the same rules.

In neighboring Massachusetts, the cultivation, sale and use of recreational cannabis-related products was legalized through a 2016 ballot initiative.

Cramer & Anderson says it’s also worth noting that, unlike in the Bay State, municipalities in Connecticut that allow micro-cultivators and adult-use cannabis stores “are subject to a cap that limits operations to one retailer and one micro-cultivator for every 25,000 municipal residents until July 1, 2024.” In addition, successful applicants must obtain a special permit from the town for both retail and cultivation uses.

But we’re still in uncharted territory with implications that are controversial, and towns are scrambling to craft appropriate regulations, ban cannabis operations altogether or enact moratoriums on cannabis applications to give planning and zoning commissions time to amend zoning codes that match this challenge.

Hearst Connecticut Media conducted a survey early this year and found that, of Connecticut’s 169 cities and towns, 22 have established bans on sales and cultivation, while 53 have enacted moratoriums on applications.

In Kent, retail stores are prohibited from selling recreational cannabis. In January, Sharon passed a six-month moratorium. Danbury passed a one-year moratorium last July. In Norfolk, a public hearing was held earlier this month to allow public input on several zoning proposals, one of which would regulate the retail sale of cannabis, Tom Fahsbender, chair of the Planning  and Zoning Commission (P&Z), told The Lakeville Journal.

But perhaps the most interesting case lies in North Canaan, where the Planning & Zoning Commission held a public hearing in May on a proposed temporary moratorium on cannabis applications.

“We have a rare opportunity for revenue in North Canaan and in light of rising costs, especially education costs, we need to take a serious look at putting a dispensary here,” said former Selectman Susie Clayton.

The town’s taxpayers are frustrated over a steep increase this year of $745,000 in the town’s Region One assessment, placing what officials feel is an undue burden on Canaan.

Though by comparison North Canaan’s population is lower than Salisbury’s, it still has to pay substantially more to the regional school district because it sends more than twice as many students to Housatonic. In addition, Salisbury’s weighted voting power on the Region One Board of Education is higher because North Canaan’s population is lower.

The higher tax burden is compounded by the fact that North Canaan’s tax rate is higher because its property values are generally lower than Salisbury’s. North Canaan Selectman Craig Whiting said last fall that the Region One assessment is “bringing our town to its knees.”

Its unknown how much revenue the cannabis industry could bring to North Canaan.

Twenty minutes to the north, Great Barrington, which has about twice as many full-time residents as North Canaan, took in more than $1 million in the first six months after Theory Wellness, the town’s first recreational cannabis store, opened in January 2019 to long lines that snaked almost around the corner to the Price Chopper. Half a dozen others have since opened.

Great Barrington’s finance director said 12 months ago that since 2019, the town had taken in $6.7 million in cannabis revenue, though officials expect the numbers to decline should sales begin in Connecticut and in New York, where the state Legislature also legalized adult-use last year.

For some perspective, in 2019 Great Barrington’s annual budget was a little more than $30 million, including its assessment to fund the regional school district.

“This will never turn into Great Barrington,” North Canaan resident Ed Capowitz said at the hearing. “We’re allowed one facility. Why turn down that revenue?”

“Our tax bills are getting higher and I know that the ... selectmen are having trouble even trying to get the budget raised whatsoever because there’s just not enough money to go around,” added Ruth Adotte. “So what I’m saying is it would help with the taxes.”

The Connecticut Department of Consumer Protection, which regulates cannabis, has laid out the taxing scheme for retail cannabis sales: the standard 6.35% sales tax levied on most retail items, a 3% sales tax dedicated to the city or town where the sale occurs, and a tax based on THC content that will cost approximately 10 to 15% of the sale price.

The state estimates the total cumulative taxes paid on cannabis purchases to be roughly 20% of the retail price.

Tim Abbott, who chairs the North Canaan P&Z, said no applications have been received yet. Weeks after the public hearing in May, the commission voted unanimously to enact an eight-month moratorium on cannabis applications to give the panel time to draw up regulations, such as which parts of town are appropriate for cannabis, hours of operation, signage and recovering costs for additional policing.

“These are the areas where we have some control,” Abbott said, who said he is neutral on whether to allow sales and cultivation of the product.

A townwide referendum on whether to allow cannabis sales and/or cultivation is tentatively slated for November. If it passes, Abbott expects the regulations should be ready for review by March 2023.

Abbott emphasized that, “Kicking the can down the road isn’t the purpose of a moratorium. It buys you time to do your due diligence, to educate yourself as a commission, to know the law, to see what it might look like in the event that the new change happens.”

The sentiment among Canaanites could spur action. Some residents at May’s public hearing objected even to a moratorium. Lyle Kloke said he thought the commission was “negligent” in not addressing the issue even sooner.