It is hemp season and today’s Cannacurio delves into the hemp licenses in our home state of Connecticut. Connecticut has three types of licenses right now that include cultivation, processing and manufacturing. Between Pending and Active there are 217 licenses and here is how they break down across activities:
Manufacturer License: To make hemp products intended for human ingestion, inhalation, absorption or other internal consumption (collectively “consumables”), you must apply for and receive a manufacturer of hemp consumables license. Such license is required to engage in the conversion of the hemp plant into a byproduct by means of adding heat, solvents, or any method of extraction to modify the original composition of the plant into a consumable.
Processor License: To use or convert hemp to make a product that is not a consumable, you must obtain a license from the Department of Agriculture. The processor license will be required to produce all animal food, and non-consumables, such as textiles and building products.
Grower License: Issued to a person in the state licensed by the commissioner to cultivate, grow, harvest, handle, store and market hemp.
- There are 217 active and pending Connecticut hemp licenses so far this year
- 66% of the licenses are cultivators, 25% cultivators and 9% processors
- 73 of the licenses have been formed with other licenses to create a vertically integrated operation. 84% of the processors are integrated with other licenses.
- Incredible Edibles, a well-known brand, received both a cultivator and manufacturer license.
One of the questions we are increasingly asked about is how many licenses are vertically integrated. For Cannabis licensing that is easier to answer as it is often regulated – think Florida and New York for full integration or New Mexico and Connecticut for partial. However in the hemp economy, it is really up to the discretion of the business to decide if it wants to and is qualified to manage multiple activities.
In evaluating the 217 licenses above we have determined that 73 of these licenses – or about a third have been vertically integrated into stacks of two or three licenses. 144 operate as stand alone licenses.
In other words, 66% are stand alone businesses and in looking at the % table above we can see that Cultivators have the highest likelihood to be a stand alone business followed by Manufacturers and Processors.
The processing function is most likely to be vertically integrated or stacked – only 3 of the 19 processing licenses are standalones.
Why does this matter?
It speaks to the ease with which business owners can make the determinations as to the types of businesses they would like to pursue. There are a couple of other factors at work here as well. In order to get all three of these Connecticut licenses, the business owners had to secure cultivation and manufacturing from the Department of Agriculture and the Processing license from the Department of Consumer Protection. This supports a trend we have seen in hemp licensing where states expand the activities they permit and utilize existing regulators to help carry the burden.
We have seen this play out in Florida and Louisiana where existing regulators manage the licensure of retail sales. This is a stark contract from cannabis regulatory schemes where monolithic entities are created to handle the process.
Here are the license holders who have secured/applied to receive all three license types in Connecticut:
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