Meeting Type: Special Meeting of the Social Equity Council
Meeting Location: Virtual only - via Zoom Webinar Platform
Chair: Andrea Comer
• Attorney General Office - guidance document, Role of Social Equity Council in Reviewing, Denying and Approving License Applications (see below pdf).
• Legislative Proposals document from the Policy Committee (see below pdf).
A special meeting of the Social Equity Council (SEC) was held virtually via TEAMS on February 17, 2022.
This meeting was recorded and posted to YouTube - To watch, visit: https://youtu.be/eHLnf1C91gQ
1. Call to order
Meeting was called to order by Andréa Comer at 11:03 a.m.
Kyle Abercrombie (Designee for David Lehman)
Jeffrey Beckham (Designee for Melissa McCaw)
Christine Shaw (Designee for Shawn Wooden)
Kelli Vallieres Joseph Williams
Council members absent:
Ramón Arroyo Fabian Durango
Staff: Ginne-Rae Clay, Interim Executive Director, SEC and Jennifer Edwards, Program Manager, SEC
3. Office of the Attorney General - Discussion.
AAG Christine Jean-Louis from the office of the Attorney General provided a summary of the guidance document, Role of Social Equity Council in Reviewing, Denying and Approving License Applications, that focused on the Social Equity Council’s review of a Social Equity Applicant’s status. The memo points to the public act and focuses on licensing under social equity status.
She noted it is not uncommon to delegate duties in the public act as needed to get the job done. She spoke of application requirements for an applicant’s social equity application. She suggested that the information is important to the public act, and so it should be easy to find on the SEC site. AAG Jean-Louis spoke of the information needed to confirm social equity applicant status and how the application process would work after the status is either confirmed or denied and the interaction with DCP. She spoke of possible conflicts among council members and staff employees and encouraged review of section 51. She reviewed quorum requirements. She reviewed administrative appeal to the Superior Court which is limited to the appeal of the denial of social equity applicant status. AAG Jean-Louis suggested that the council members and staff are trained on meeting procedures, FOIA requirements and how to prepare a record. A discussion ensued.
4. SEC Legislative Proposals
Policy Committee Chair Ed Shirley reviewed the legislative changes that are recommended by the committee to the full council.
1. Sec. 149 - Currently, there is no limit on the number of SEAs that can apply for DIA cultivator licenses if they pay a $3 million fee to forego the lottery process. This could potentially result in market oversaturation. He noted that the 90-day application window for these applicants has opened already and is a one-time opportunity. Legislative change would take effect after that window closes. Therefore, no proposed legislative language change at this time. A discussion ensued.
2. Sec. 40 - This language does not limit the number of EJVs for certain license types. As a result, a multistate operator could have an unlimited number of EJVs with a social equity applicant. While the resources, knowledge and infrastructure support would certainly benefit those SEAs that find an MSO partner, those less “attractive” SEAs, the ones who most need a leg up, could be left out of the market, which could easily become oversaturated with unlimited EJVs. He noted that imposing a limit on EJVs would lessen the likelihood that larger entities would dominate the market through EJV creation via the lottery process, but would not impact producers and retailers that create EJVs. No proposed legislative language change to the section. A discussion ensued about the number of applications that can be expected.
3. Sec. 27 - This section allows producers converting to an expanded producer license to pay a reduced fee if they form two EJVs, however that requirement has no associated timeline. He noted that the legislative language should require producers to establish an EJV no later than one year after receiving a hybrid license. Sec. 27(g) If a producer had paid a reduced conversion fee as described in subsection (b) of section 26 of this act at the time of conversion application, and subsequently did not create at least two equity joint ventures under this section that each obtained a final license within fourteen months of that conversion application, the producer shall be liable for the remainder of the full conversion fee of three million dollars. Also proposed is (h) An expanding producer shall create not more than two equity joint ventures, unless such additional equity joint ventures, in conjunction with the same producer, have obtained provisional licenses by effective date of this section. No equity joint venture that shares a common individual that satisfies the requirements of Section 1 (48)(A) and (B) with another equity joint venture shall be approved by the council.
4. Sec. 145 - This section allows a dispensary converting to a hybrid-retailer license to pay a reduced fee if they form two EJVs, however that requirement has no associated timeline. Legislative language should require dispensaries to establish an EJV no later than one year after receiving a hybrid license. He noted Sec. 145 (g) If a dispensary facility has paid the reduced conversion fee at the time of conversion application, in accordance with subsection
(a) of this section, and did not subsequently create at least one equity joint venture under this section that obtained a final license within fourteen months of that conversion application, the dispensary facility shall be liable for the remainder of the full conversion fee of one million dollars, established under section 34 of this act. (h) A converting dispensary shall create not more than two equity joint ventures, unless such additional equity joint ventures, in conjunction with the same converting dispensary facility, have obtained provisional licenses by the effective date of this section. No equity joint venture that shares a common individual that satisfies the requirements of Section 1(48) (A) and (B), with another equity joint venture shall be approved by the council.
5. 1 (48) This section defines “social equity applicant”. Mr. Shirley spoke of the recommendations from IMRP UCONN study: Allow SEC to make changes to the “Social Equity Applicant” definition on an ongoing basis. Remove income caps. Add drug related arrest, conviction, incarceration. Add family impacted family member. Model: Massachusetts (only one): They have resided in an area of disproportionate impact for at least 5 of the past 10 years; • They have a past drug conviction, and they have been residents of Massachusetts for at least the preceding 12 months; or • They have been married to or are the child of a person with a drug conviction and they have been residents of Massachusetts for at least the preceding 12 monthsAmend language as follows:
"Social equity applicant" means a person that has applied for a license for a cannabis establishment, where such applicant is at least sixty-five per cent owned and controlled by an individual or individuals, or such applicant is an individual, who: (A) Has a past drug arrest, conviction or incarceration and they have been residents of Connecticut for at least the preceding 12 months; or (B) (i) Was a resident of a disproportionately impacted area for not less than five of the ten years immediately preceding the date of such application; or
(ii) Was a resident of a disproportionately impacted area for not less than nine years prior to attaining the age of eighteen;” or has been married to or is the child of a person with a drug arrest, conviction, or incarceration and has been a resident of Connecticut for at least the preceding 12 months.
5. Sec. 1 (17) - This section defines “disproportionately impacted area.” Per the recommendation from IMPR UCONN study:
Allow SEC to make changes to the “Disproportionately Impacted Area” definition on an ongoing basis. Remove unemployment rate and replace with poverty rate. Additional considerations: Replace drug-related offenses with all criminal justice convictions; add race and ethnicity. Model: Illinois (only one) • the area has a poverty rate of at least 20% according to the latest federal decennial census
• 75% or more of the children in the area participate in the federal free lunch program according to reported statistics from the State Board of Education;
• at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program;
• the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the United States Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application;
• has high rates of arrest, conviction, and incarceration related to the sale, possession, use, cultivation, manufacture, or transport of cannabis. "Disproportionately impacted area" means a United States municipality, census tract or other geographic area in the state that has, as determined by the Social Equity Council under section 22 of this act, (A) a historical conviction rate for drug-related offenses greater than one-tenth, or (B) an area poverty rate of higher than of at least 20 per cent.
Andréa Comer asked for a motion to approve recommendations with regards to the legislation as well as to include the areas of concern, that councilmembers Jefferson and Shaw pointed out, particularly to Sec. 149 not having a limit of applications to as well as a further evaluation of the IMAP study recommendations.
Motion – Joe WIlliams 2nd – Michael Jefferson
Discussion. Christine Shaw asked if there was any part of the AG’s review, that would warrant further review of the statute. There was none. Kelli Valleries – asked about the
motion and Ms. Comer clarified that motion is to approve the recommendations that have been discussed and to include the concerns regarding Sec. 149 not having a limit and to further evaluate the proposals that were provided through the study.
Abstain – Jeff Beckham, Kelli Vallieres In favor –
Kyle Abercrombie Marilyn Alverio Corrie Betts Andréa Comer Avery Gaddis Subira Gordon Michael Jefferson Ojala Naeem Christine Shaw Edwin Shirley Joseph Williams
Nays – none
5. Adjournment - Andréa Comer asked for a motion to adjourn. Motion – Michael Jefferson
2nd – Corrie Betts All In Favor - All
The meeting adjourned at 12:00 noon
Minutes are a draft until approved at a subsequent meeting.