Connecticut Innovations, the parastatal investment capital arm of the state, has invested in a Colorado-based marijuana retail company called 1906, a specialist in fast-acting edibles, and is expanding into Connecticut. However, cannabis activists and would-be entrepreneurs in the state are not in support of the investment as they view it as the state giving money to an already established multi-state organization while they are navigating the state's social equity rules and competing for a restricted number of licenses.
In a statement by Lauren Carmody, the vice president of marketing and communications for Connecticut Innovations, in February of this year, the company invested 1.25 million dollars in 1906. The transaction was part of Connecticut Innovations' third round of capital financing, totaling $33.4 million to 1906 since 2017.
Cannabis Business Owners React to the Investment
The investment from Connecticut Innovations, however, sparked some fiery exchanges between the CEO of 1906, Peter Barsoom, and the former president of the Minority Cannabis Business Association, Jason Ortiz, in an online forum hosted by Arcview.
In the conversation, Peter Barsoom started by saying he had yet to send in his application to obtain a Connecticut cannabis license and said he, however, intended to apply for multiple licenses.
Even though his organization would be eligible for the more costly general licenses only. The law in Connecticut allows 1906 to team up with social equity applicants, possibly taking up some of the social equity locations.
Ortiz stated that there is no way any money gotten from the Connecticut legalization system should be used to help people from other states obtain licenses. He added that it is quite ridiculous in the sense that if he is applying for the same lottery license, they will be able to afford to put in one thousand lottery tickets. He can put in just ten, that they will be using Connecticut innovation funds to force him out.
Carmody, on the other hand, believes that Connecticut Innovations' investment is a statement to the market that they are willing to put money into cannabis and that 1906 has created a presence in Connecticut by filing with the Secretary of State's office.
Carmody explained that it is not a one-and-done situation and that they have the opportunity to investigate the cannabis business further and increase their investment. It is the first of what could be many for us, he added.
The battle for marijuana licenses is an intense one, as there are just 56 licenses available for a variety of marijuana-based services. More than 3,000 social equity license applications and more than 1,600 general license applications have been received by the Department of Consumer Protection.
Those who applied are later subject to a lottery which will decide who gets a provisional authorization to begin producing, selling, or distributing recreational cannabis within the state.
Even though much of the language in the enabling measure focused on equality for populations who have been disproportionately disadvantaged by previous marijuana regulations, some argue that the law still favors larger, more established cannabis companies and those who grow cannabis for medicinal purposes.
As the chances are so low, the thought that Connecticut's venture capital arm would put money into a company that is not from the state that has ambitions of getting a license creates unease.
When Ortiz was approached for a comment, he said, "It had become very clear that Governor Lamont never intended to allow anybody apart from his wealthy friends to own the whole cannabis market." He made use of the suffering of poor communities to establish yet one more way for those who are very rich to own everything in Connecticut, down to programs that are solely meant tor working-class families, Ortiz added.
Connecticut Innovations, according to Carmody, looks at the issue strictly from an investment aspect, observing the management team, the capacity to grow jobs, and the potential to earn a return on investment, and 1906, ticked all three boxes.
Carmody also said that they are assessing it from an investment point of view and found that there is more potential there. He said this is just the beginning for them, not the end, and they want to further explore it.
Except for social equity applicants and cannabis activists in Connecticut, the law as it stands currently is causing more hassles and inequities for individuals attempting to get into this growing market. Ortiz said that the whole situation has been quite loathsome to watch unfold.
What led to Connecticut Innovations Investing in 1906?
In a statement, Lauren Carmody, vice president of marketing at Connecticut Innovations, stated that, in addition to their faith in the future potential of 1906, Connecticut Innovations' investment recognizes the growing importance of the cannabis business in the state's health, economic, and social development.
Along with its history of success and innovation, 1906 is an excellent addition to Connecticut Innovations' growing portfolio.
The investment will assist in accelerating the company's lofty plans for expansion and establish 1906 as the pioneer of many marijuana industry leaders based right in Connecticut.
The decision to invest was induced by the company's leading position as the producer of the number-one marijuana pill in the United States, along with its commitment to health, employment, wellness, and social justice and its successful revenue generation ability, according to the Connecticut Innovations team.
The investment aligns with Connecticut Innovations' mission to encourage innovation and diversity in the state and backs efforts to focus on public health, public safety, equity, and social justice.
Bottom Line
Connecticut Innovations' investment in 1906 is a significant milestone for the cannabis sector, and institutional investors no longer need to wait for changes in federal regulations before investing in the cannabis market (or funding the industry's expansion); the 1906's CEO, Peter Barsoom, stated. The investment from Connecticut Innovations will help 1906 expand its business in the state, and it will place 1906 at the epicenter of the Northeast's cannabis boom at the perfect time.
The arrival of 1906 and their products into Connecticut is quite thrilling (at least for the company), despite the disapproval of the state's cannabis activists and business owners.
