Connecticut to boost cannabis industry participation with tribal compact
- Connecticut’s Gov. Ned Lamont signed a compact with the Mashantucket Pequot Tribe to allow cannabis cultivation, manufacturing, and sales on tribal land, introducing tribal cannabis into the state's regulated market.
- The agreement aims to increase participation in Connecticut's limited-license adult-use cannabis market, which currently has high application fees, strict regulations, and license caps that limit competition.
- The tribe must comply with state regulations on tracking, product restrictions, and operations, but tribal cannabis will not be subject to state taxes, instead imposing tribal taxes equal to or greater than state taxes.
- Cannabis sales in Connecticut lag behind Massachusetts, with the state recording $290 million compared to $1.6 billion in Massachusetts, partly due to limited retail opportunities and higher prices in Connecticut.
Tribal cannabis could soon be coming to Connecticut, where operators in the limited-license state have to date enjoyed limited competition.
That’s after Gov. Ned Lamont last week signed a compact with the Mashantucket Pequot Tribe, the latest example of a state opening the door to cannabis cultivation, manufacturing and sales on sovereign tribal land – and welcoming tribal cannabis into the state’s regulated market.
Other Native tribes across the country have sealed similar deals with state governments, perhaps most notably in Michigan and in Minnesota, where tribal operators were the first to record adult-use sales last fall.
Boosters of tribal cannabis say the arrangements allow for economic opportunity on tribal lands while also introducing competition in emerging cannabis markets.
In Connecticut, the Mashantucket Pequot Tribe does not yet have any adult-use cannabis operations despite authorizing legal marijuana in its jurisdiction in 2021.
But in a statement, Lamont said the agreement would eventually lead to “increased participation in the state’s adult-use cannabis market.”
That appears to be a nod to the license caps in place in Connecticut, where thousands of applicants vied for one of a few dozen permits state regulators made available.
Many cannabis operators consider Connecticut – a vertically integrated market dominated by MSOs with few small businesses and high license fees – to have some of the country’s most challenging regulations.
The application fee for a cultivation license, for example, is $3 million.
And the state strictly limits business operations in ways not seen in other states, such as forbidding certain strain names.
According to the compact, the tribe will agree to follow state law governing track-and-trace, product restrictions, and other rules. It also reserves “Cannabis Activities” on tribal lands to only a “Tribal Enterprise.”
Tribal cannabis won’t be subject to any state taxes. However, tribal cannabis won’t be automatically cheaper than cannabis sold on state-licensed dispensaries.
According to the compact, the tribe must apply a tribal tax “at a rate of not less than 100% of the amount of any State Taxes that would be applicable if such sales were occurring by a State Licensee outside of Tribal Lands.”
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Owing in part to limited retail opportunities, cannabis sales in Connecticut are still lagging behind nearby Massachusetts. Massachusetts recorded $1.6 billion in sales last year compared to Connecticut’s $290 million.
But that’s also allowed retailers to charge slightly higher prices. As Inside Investigator reported, citing state data, the average price per gram of cannabis flower increased from an all-time low of $7.09 in April to $7.18 in May.