On June 17, 2021, Connecticut’s Senate Bill 1201: An Act Concerning Responsible and Equitable Regulation of Adult-Use Cannabis was signed. Importantly, this bill legalizes cannabis for adults 21 and older and expunges records of cannabis-related convictions. Moreover, the legislation contains reforms that address equity, criminal justice, and public health. Excitingly, Connecticut is now the 18th state to legalize cannabis for adult users.
Beginning on July 1, 2021, adults 21 and over can possess up to 1.5 ounces of cannabis or an equivalent amount of cannabis products or concentrates. Furthermore, adults can now cultivate up to three mature and three immature plants in their homes. The bill also decriminalizes possession exceeding the 1.5-ounce cap, imposing a civil fine instead of possible jail time.
The tax rate on cannabis includes first a 3% municipal sales tax directed to the town or city where the retail sale occurred. Furthermore, there will be a 6.35% state sales tax. Additionally, cannabis products will be taxed based on the THC content of the product as follows:
- 2.75 cents per milligram of THC for cannabis edibles
- 0.625 cents per milligram of THC for cannabis flower
The bill imposes an excise tax on the first sale or use of cannabis flowers, cannabis trim, or wet cannabis by a cultivator in the state. The tax rate is:
- $1.25 per dry-weight gram of cannabis flowers,
- $0.50 per dry-weight gram of cannabis trim, and
- $0.28 per gram of wet cannabis.
The state will allocate a percentage of this tax revenue to communities that the war on drugs has most negatively impacted. The fund will be called the Social Equity and Innovation Fund. Moreover, the state will also allocate a percentage to support substance misuse treatment and prevention. This fund will be known as the Prevention and Recovery Services Fund. Under the bill, each cannabis establishment must maintain tax documents in an auditable format for the current tax year and the three preceding tax years.
All cannabis establishments are required to report their annual electricity usage annually. They must also specify which fraction of electricity generation comes from Class I Renewable Portfolio Standards produced in the state through the Regional Greenhouse Gas Initiative (RGGI). Cannabis companies are encouraged to purchase renewable energy when possible.
The legalization of marijuana will curb the sale of it on the black market and thus protect consumers. Moreover, the market will generate new jobs and business opportunities while creating a stream of millions in annual tax revenues for the state. The green rush is here in Connecticut! Are you excited to be a part of it? Contact us today to learn how we can help!