Connecticut Cannabis Startup Guide

 

Starting a cannabis company in Connecticut? We’ve put together a state-specific guide covering everything from fees and local rules to what you should include in an Connecticut cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.

Connecticut medical cannabis business startup guide and planning banner

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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in Connecticut?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in Connecticut


Since HB 5389 passed in 2012, Connecticut adults can possess up to 2.5 ounces of cannabis each month if they have a written recommendation from a doctor. More than 50,000 patients have registered for medical marijuana use in Connecticut. Connecticut’s Department of Consumer Protection oversees the state’s medical marijuana program. Sales via medical dispensaries could be as high as $200 million in 2021. Recreational marijuana sale and use is illegal, as is growing marijuana at home for any reason.

Cannabis business license types

Connecticut issues licenses for cannabis producers (growers), dispensaries, and controlled substance testing labs.

Dispensary: This is a retail storefront where patients can purchase medical marijuana if they have a doctor’s note. In Connecticut, every dispensary must employ a licensed pharmacist and follow other extensive state-mandated rules.

Producer/cultivator: These businesses, also called grow operations, grow cannabis plants indoors. Producers create items like baked edibles, capsules, patches, lotions, and oils. Marijuana is then sold through a dispensary. Like dispensaries, producers must follow strict regulations in Connecticut, like requiring employees working with marijuana to wear clothing without pockets (see page 58 here) and more.

Testing lab: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. These labs use methods like liquid or gas chromatography to analyze products for CBD and THC content, pesticides, terpenes, bacteria, fungi, and heavy metals, to name a few. In Connecticut, labs must be registered with the state as “controlled substance laboratories” (see section 21a-408-57 here).

Ancillary business: If you don’t want to grow or sell cannabis in Connecticut, there are plenty of other ways to be part of the booming cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!


Fees and other barriers to entry


Local governments may forbid cannabis companies or certain locations, so check city and county regulations.

Application fees: Applying for a cannabis business license in Connecticut costs $25,000 if you’re a producer/grower, but only $1,000 if you’re a dispensary.

License fees: It’s $75,000 for a new or renewal producer/grower license, and $5,000 for a new or renewal dispensary license.

Financial requirements: Cannabis producers need $3.5 million: $2 million for construction and $1.5 million for operation.

Criminal background check: Cannabis business license applicants have to consent to a criminal records check to evaluate their “suitability” to be part of Connecticut’s medical marijuana program. Fingerprints, however, are not required.

Certificate of good standing: Connecticut requires that your cannabis business application include a certificate of good standing (also known as a certificate of legal existence). Here’s where to get one.


Do you need a cannabis business plan in Connecticut?

A business plan is not required to get a medical marijuana business license in Connecticut, but it will make the process a lot easier. Your application already has to include titles and roles of high-level employees, sources and uses of funds, a dispensary blueprint or floor plan, anti-theft plan, any marketing plans, and a security plan, much of which naturally overlap with a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan


Here’s what an Connecticut marijuana business plan should include:

  • Product/service description: What’s unique about your dispensary? Be as specific as you can. Which strains of flower and which products will you sell?

  • Market research: How many people live within five miles? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team, such as your medical director. Obviously include cannabis industry experience, but don’t worry if you don’t have any. Highlight leadership skills, customer service, and business development experience in other industries.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. It’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • Connecticut-specific requirements: Include any details that Connecticut requires about your security system, product tracking, secure product transport, waste plan, and other aspects of your business.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Connecticut cities and towns are still in the process of determining their cannabis regulations. Google your city or municipality name and “cannabis regulations” or “marijuana laws” (for example, East Hartford’s are buried in this zoning document). If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage (e.g., Wethersfield) or contact your city clerk, city manager, or town hall.

Helpful Links
Get expert help


Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:

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