Connecticut’s Cannabis Tax Now Funds Neighborhood Grant Programs

Connecticut’s Social Equity Council approved about 174 neighborhood groups on September 15, 2026, for a $36 million cannabis-tax grant round. The money is the state’s largest community payout from adult-use sales, aimed at areas hit hardest by cannabis arrests.

It arrives after a two-year freeze, and it still leaves a second promise unfinished. The same tax account that will feed those grants held about $72.7 million at the end of November 2025, while the loan program for social equity cannabis businesses had issued four loans totaling $1.68 million.

A $36 Million Grant Round Finally Clears the Council

Gov. Ned Lamont signed the adult-use law on June 22, 2021, making Connecticut the 19th state to legalize. Sales began on January 10, 2023. From the start, the statute split the job of “equity” in two: licenses and capital for people from harmed neighborhoods, and tax money sent back to those neighborhoods as grants.

The grant side moved first. In 2023 the council ran a $6 million pilot through six regional intermediaries, including $1 million for New Haven’s Prosperity Foundation. That fall the foundation put $900,000 out to 25 mostly Black-led groups, covering reentry work, youth programs, and job training. Ginne-Rae Clay, then the council’s executive director, said the aim was simple.

“We wanted to make sure the communities and individuals that have been impacted by the war on drugs receive a benefit,” Clay said.

The next round did not follow on schedule. In 2024 the council paused new grants after the governor’s office and the legislature’s Black and Puerto Rican Caucus questioned strategy and accountability. Clay left. Brandon L. McGee Jr., a former lawmaker who helped write the 2021 law, took over as chief executive. On June 25, 2025, the council relaunched the work as Reimagine and Revitalize, or R2, and spent a year hiring grant managers, writing a scoring rubric, and touring the state.

Applications opened on May 26, 2026, and closed on July 15. On September 15 the council approved about 174 community-based organizations for $36 million over three years, with money scheduled to move from October 2026 through September 2029. McGee called it the largest community reinvestment program since the agency opened.

The organizations receiving these funds know their communities, understand their needs, and have already built the trust required to make a difference. R2 allows us to invest directly in that work, helping CBOs expand their reach and create new opportunities. This is reinvestment in action and it’s where the real work begins.

Brandon L. McGee Jr., CEO, Connecticut Social Equity Council

The awards go to groups working on economic development, reentry after incarceration, and youth programs, and only in designated disproportionately impacted areas. That is a different product from a cannabis shop license. It is also the product the tax is now built to produce.

How Connecticut Splits Every Cannabis Sale

Until October 1, 2026, the statewide cannabis tax is still a potency levy: $0.00625 per milligram of THC in flower, $0.0275 per milligram in edibles, and $0.009 per milligram in other products. Shoppers also pay the 6.35 percent state sales tax and a 3 percent municipal cannabis tax in the town where the sale happens.

On October 1, 2026, the Department of Revenue Services replaces the milligram math with a flat 10.75 percent tax on cannabis receipts. The sales tax and the town tax stay. Added together, the three levies come to a 20.1 percent stack at the register. That is a lighter state cannabis rate than Michigan’s 24 percent cannabis tax, but it is still a wide gap for unlicensed sellers to undercut.

The Department of Revenue Services collected $4,675,642 in cannabis tax in the fiscal year that ended June 30, 2023, a partial year of sales, and $20,509,089 in the year that ended June 30, 2024. Those figures are the statewide cannabis tax only. They do not include sales tax, the town tax, or license fees.

For fiscal years 2024 through 2026, 60 percent of the cannabis tax goes to the Social Equity and Innovation account, 25 percent to the Prevention and Recovery Services Fund, and 15 percent to the General Fund. For the years ending June 30, 2027, and June 30, 2028, the 2026 tax law raises the equity share to 70 percent and cuts the General Fund to 5 percent. From the year ending June 30, 2029, on, 75 percent goes to equity and 25 percent to prevention, with the General Fund share gone.

FY 2024 CANNABIS REVENUE BY FUND

Those FY 2024 cannabis revenues by fund come from the legislature’s Office of Fiscal Analysis and mix the cannabis tax with sales tax, town tax, and fees. That is why the equity line can exceed 60 percent of the Department of Revenue Services cannabis-tax take. Conversion fees sit in the same account as the 60 percent share.

As the equity percentage steps up, the legal market becomes a dedicated repair tax. Prevention keeps a flat quarter. Towns keep their 3 percent. The General Fund’s claim shrinks and then ends. The architecture is no longer a temporary set-aside. It is the point of the tax.

The $72.7 Million Sitting in the Equity Account

Collection ran ahead of spending. McGee’s finance report to the council’s finance committee on December 18, 2025, laid out an account that had grown while R2 was still being built.

EQUITY ACCOUNT, NOVEMBER 30, 2025

• Opening cash: $66 million on July 1, 2025.
• Tax in the door: $6.41 million in fiscal 2026 cannabis-tax receipts through November 30, plus $65,747 in loan interest.
• Money out: $703,841 spent, including $675,974 on staff, in a fiscal 2026 budget of about $17.5 million.
• Closing cash: about $72.7 million still in the account.

McGee told the committee the slow start was on purpose, to line spending up with contracts and compliance. Finance chair Avery Gaddis and the other members present accepted the report without extra questions. The pause after 2024 is the other half of that pile. Grants stopped. The tax did not.

FROM LEGALIZATION TO THE $36 MILLION VOTE

1. June 22, 2021: Lamont signs the adult-use law and creates the Social Equity Council.
2. January 10, 2023: Adult-use sales begin, first through converted medical shops.
3. 2023: The council awards $6 million in pilot grants through six regional intermediaries.
4. 2024: New community grants pause after a fight over strategy and accountability.
5. June 25, 2025: The council relaunches the program as Reimagine and Revitalize and seeks grant managers.
6. December 18, 2025: The finance committee records about $72.7 million in the equity account and $703,841 spent so far that fiscal year.
7. May 26, 2026: R2 applications open for ten regions.
8. July 15, 2026: The application window closes.
9. September 15, 2026: The council approves about 174 groups for $36 million.
10. October 1, 2026: The statewide cannabis tax becomes 10.75 percent of receipts.

R2 commits about $12 million a year once the three-year contracts run. That is a large draw on the account, and it still leaves tens of millions after the first year of checks. The council also flagged a separate $2 million justice-impacted housing effort with the Department of Correction and the Department of Housing. Onboarding and training for the new grantees were still ahead when the September vote landed.

Four Loans Versus 174 Neighborhood Grants

The 2021 law did not treat grants as a substitute for ownership. It reserved 50 percent of lottery licenses for social equity applicants, defined as firms at least 65 percent owned and controlled by people who meet an income test (household income below 300 percent of the state median) and a residency test in a disproportionately impacted area. Medical shops could convert through equity joint ventures. The state also authorized $50 million in bonds for a revolving loan fund.

By November 30, 2025, $10 million of that loan capital had been set aside. Four loans had closed, totaling $1.68 million, leaving $8.32 million unissued. Council materials from late 2025 said two more applications were in closing and two had just been approved, with another $1.8 million expected soon. Even if those close, the loan book is still a rounding error next to $36 million in neighborhood grants and about $72.7 million that had been sitting in the tax account.

That gap is the second-order effect of the tax design. A grant to a youth program or a reentry house can be scored, contracted, and watched by a United Way. A cultivator license needs a building, a bank, a testing lab, and time. When the first grant round drew heat, the council rebuilt the community side with managers, rubrics, and a 10 percent administrative cap. The ownership side still depends on lotteries, joint ventures, and a loan fund that has issued four notes.

Connecticut Open Data listed 76 licensed cannabis and medical marijuana retail locations as of September 24, 2026. Social equity winners are in that mix, along with converted medical operators and joint ventures. The public fight that remains is over who gets the next licenses. On September 23, 2026, U.S. District Judge Vernon D. Oliver dismissed a challenge by hemp farmer Brant Smith, who argued the social-equity rules blocked him from a cultivator license. Oliver did not rule on the constitutionality of the system. He found Smith had not shown standing, and he gave Smith until October 21, 2026, to amend.

Southern Connecticut State University, meanwhile, is selling a different kind of access: scholarships, funded with the council, for a 16-week online cannabis industry certificate. Jobs and neighborhood grants are easier to stand up than shops. They are also what the tax, as rewritten, is now calibrated to buy.

Bridgeport and Meriden Posted the First Award List

R2 runs through seven grant managers across ten regions. Each manager screens applications with a council rubric, recommends awards, and is barred from applying for the money or taking a financial cut beyond a 10 percent administrative cap. Monthly financial reports, quarterly program reports, and yearly site visits are required. The council can pull a manager that misses the contract.

The May 26, 2026, notice set three-year awards in a range from $75,000 to $300,000, with about 18 groups expected in each region. The first detailed public list came from the Community Foundation Mission Investments Company, the manager for Bridgeport and Meriden, which posted $5,812,500 for Bridgeport and Meriden on September 15, 2026. That sum covers 29 nonprofits, 22 in Bridgeport and 7 in Meriden, with awards from $105,000 to $300,000 over three years.

SAMPLE R2 AWARDS IN BRIDGEPORT AND MERIDEN

Joseph Williams Jr., managing director of the mission-investing arm, said the work only holds if the neighborhoods that were targeted by enforcement also get to steer the money. “Meaningful progress happens when impacted communities have the agency, resources and support to shape their own futures,” Williams said.

Other regions had not all posted full recipient lists in the same detail. The managers, and the map they cover, are the other half of the story, because they, not cannabis operators, now decide which storefront programs the tax underwrites.

R2 REGIONS AND GRANT MANAGERS

• Bridgeport and Meriden: Community Foundation for Greater New Haven, through its mission-investing company.
• Danbury, Norwalk, and Stamford: United Way of Coastal and Western Connecticut.
• Hartford and East Hartford: United Way of Central and Northeastern Connecticut.
• New Britain: Community Foundation of Greater New Britain.
• New Haven, East Haven, and West Haven: United Way of Greater New Haven.
• New London, Norwich, and Windham: United Way of Southeastern Connecticut.
• Waterbury: United Way of Greater Waterbury.

New Haven is no longer routed through the Prosperity Foundation, which ran the 2023 pilot there. The new design puts a United Way in that seat, with the council keeping final say on every subgrant. The beekeeping classes and fatherhood programs that marked the first New Haven round sit inside a thicker compliance shell. The recipients are still neighborhood groups, not cannabis licensees.

Restricted Uses for the 3 Percent Town Tax

Host cities collect a 3 percent municipal cannabis tax on top of the state levies. In fiscal 2024 that slice was $5.5 million. Statute does not dump it into a town’s rainy-day account. The money has to go to a short list of local uses tied to the same repair theory as the state equity account, including streetscape work near cannabis stores, youth services, and help for people coming home from incarceration.

WHERE THE TOWN 3 PERCENT CAN GO

• Streetscape: Neighborhood improvements in communities that host retailers, hybrid retailers, or micro-cultivators.
• Youth: Education, youth employment, training, and youth services bureaus.
• Reentry: Services for people who were incarcerated.
• Health: Mental health and addiction services.
• Prevention fund, separate: 25 percent of the state cannabis tax, not the town tax, continues to feed the Prevention and Recovery Services Fund in every year of the schedule.

That local 3 percent is easy to miss in a story about a $36 million state round, and it is the piece of the tax that never hits Hartford. A city with a busy hybrid retailer is collecting a restricted stream for sidewalks, youth bureaus, and reentry desks while the Social Equity Council runs the larger grant machine through United Ways and community foundations.

On October 1, 2026, the potency tax disappears and the 10.75 percent retail tax takes its place, with a larger share already written to flow toward the equity account in later years. The 174 groups still have to sign contracts, take the training, and start billing. The loan fund still has $8.32 million unissued against the $10 million that was set aside. The tax will keep filling the account either way.