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CT confronts controversy over cannabis cash and social equity

A cannabis plant and flag bearing marijuana leaves outside the state Capitol on Tuesday, March 22, 2022.
Ginny Monk
CT Mirror
A cannabis plant and flag bearing marijuana leaves outside the state Capitol on Tuesday, March 22, 2022.

The question of who would benefit from the legalization and commercialization of cannabis in Connecticut was divisive from the start, even as the issue was framed loftily as a means to “community reinvestment” in the neighborhoods disproportionately harmed by America’s racially tinged war on drugs.

Internecine differences over access to industry licenses nearly derailed legalization, which narrowly passed in special session on June 17, 2021 — the 50th anniversary of Richard Nixon’s declaration of illicit drugs as “public enemy No. 1,” an act a Nixon aide later described as intended to disrupt political enemies, Blacks and the antiwar left.

Now, the first distribution of community reinvestment funds generated by license fees has prompted an unusual examination of the Social Equity Council, a small agency that oversees key elements of cannabis policies and licensing, as well as a turf war with urban legislators.

The $5.2 million in the initial 162 community reinvestment grants authorized last year was sprinkled among scores of churches, youth programs and other nonprofits in census tracts deemed to be “disproportionately impacted areas,” or DIAs, as measured by poverty and residents convicted of drug crimes.

A church in Waterbury attended by Ginne-Rae Clay, the executive director of the Social Equity Council, was selected for a $15,000 grant. The council’s chair, Andréa Comer, reported receiving a complaint that Clay also suggested to a license applicant the donation of a freezer to the same church, an allegation Clay denies.

With a staff of a half dozen, the council outsourced the process for choosing recipients to six nonprofits with grant-making experience, roughly dividing the state into six regions and providing $1 million for each one. A review by The Connecticut Mirror found grants ranging from $1,000 to $216,000, with an average of $32,251.

The administration of Gov. Ned Lamont and legislators say they saw little overall strategy, nor were they clear on the criteria employed in choosing recipients. And they shared a larger question: Would the grants, many to well-regarded nonprofits, produce meaningful change?

“The progressive in me and the business person in me says, ‘I gotta show people this money is making a difference,’” said Lamont, who asked the comptroller’s office to audit the council’s finances and review its policies. The audit is underway.

Council members also have questioned expenditures made for marketing and education, including $1 million to a California institution that provides online training to would-be cannabis entrepreneurs. And the governor’s letter asking Comptroller Sean Scanlon for an audit indicated broader concerns.

“Several stakeholders, including social equity applicants and legislators, have voiced concerns regarding the financial management and decision-making processes of the programs and initiatives under the purview of the SEC,” Lamont wrote.

Members of the Black and Puerto Rican Caucus, while also questioning the absence of an overarching strategy, had a more granular concern reflecting the realities of retail politics: Which non-profits in their circles got money, and which ones did not?

“My members looked at the list, it's like, ‘Hey, there are some agencies that are missing from this list that are on the ground doing the work,’” said Sen. Patricia Billie Miller, D-Stamford, the chair of the Black and Puerto Rican Caucus. “I started to raise my antenna and just realized that there had to be some more oversight.”

Rep. Minnie Gonzalez, D-Hartford, the leader of a Puerto Rican and Latino Caucus created last year and a member of the long-established Black and Puerto Rican Caucus, said the expectation was that community reinvestment would be geared to job creation and economic development with a lasting impact.

“The money was supposed to go for economic development. That was the whole thing. We can help to improve the quality of life of our community,” said Gonzalez, who shared her concerns with the governor and legislators and agitated for a halt in grant making.

It’s very frustrating and very annoying, quite frankly, to hear all this noise coming from what I would consider to be Johnny Come Latelys.

Last month, the Black and Puerto Rican Caucus asked for a pause in further grant making, and the council voted on June 4 to comply, albeit with some sharp dissent.

Mike Jefferson, a lawyer and council member from New Haven with long experience in activism on issues affecting the Black community, expressed annoyance at Lamont and the Black and Puerto Rican Caucus for what he saw as a belated interest in the operations of the Social Equity Council.

“It’s very frustrating and very annoying, quite frankly, to hear all this noise coming from what I would consider to be Johnny Come Latelys,” Jefferson said at the meeting. “We’ve been doing a lot of work over the past three years, and we have not heard from anyone … not legislators, not the governor’s office.”

They’ve heard from them now.

In addition to the requested pause in grant making and the audit, language inserted into a budget bill in the legislative session that ended in May increases legislative oversight over the Social Equity Council, requires periodic reporting to the governor and legislature, and clarifies how grants can be made.

Specifically, it underscores that money can be used to provide access to business capital, technical assistance or workforce education in any industry, not just cannabis. Starting on July 1, Clay will be required to prepare a monthly report on the council’s activities and submit it to the council members and the Black and Puerto Rican Caucus.

Perhaps ominously, the language also specifies a process for removing the executive director, whom Jefferson sees as being unfairly faulted as bumbling the rapid start-up of an agency tasked with helping to launch and oversee a new recreational cannabis industry, as well as addressing inequities.

Licenses are issued by the Department of Consumer Protection, but the Social Equity Council plays an important role: To obtain a license, an applicant must win council approval of a social equity plan indicating they would contribute to addressing racial, economic and social inequities.

Jefferson is an appointee of Senate President Pro Tem Martin M. Looney, D-New Haven, and a familiar figure to state senators, some of whom he is implicitly criticizing: He has a part-time job as the Senate clerk.

“I don't look to pick fights or what have you. I don't like the false narrative that's been presented out there about the SEC,” Jefferson said in an interview, using the acronym for the Social Equity Council.

Jefferson said any suggestions of wrongdoing by Clay or anyone else were ill-founded.

“No one misappropriated any funds or anything like that,” Jefferson said. “That was just a false narrative that was aimed at our executive director, who I think has done an incredible job under the circumstances, building this thing up from day one.”

I know you realize the potential ethics and conflict issues with these allegations.

In an email to Jefferson in April, Comer relayed a complaint from a representative of an applicant unsettled by a conversation with Clay while the applicant’s social equity plan was pending. The applicant had requested anonymity and was not identified in the email.

“They were subsequently told by the Executive Director that they need to visit a church in Waterbury to demonstrate their commitment to social equity in the DIA, and that the church ‘needed a new freezer.’ The operator [applicant] did in fact visit the church, where the need was affirmed. The operator communicated that they did not feel comfortable funding that need, and the plan approval was delayed,” Comer wrote.

“Subsequent suggestions were made to the operator around organizations with which they should partner, despite having established a partnership with a community based organization in Waterbury,” Comer wrote. “That organization did not meet the ED’s approval however, as she deemed them to be ‘too political.’ That said, the suggestions she made in terms of partnerships included one with an organization that has strong ties to a former state representative.”

Comer sent the email to Jefferson because of his role as chair of the council’s personnel committee.

“As an attorney, I know you realize the potential ethics and conflict issues with these allegations, which have the potential to further harm the perception of the Council and its efforts,” Comer wrote.

It was unclear what if anything Jefferson did in response. In an interview, he said he had no strong recollection of the email.

Clay, who lives in Waterbury, said she believes she knows the conversation to which Comer referred but disagreed with the account. Clay said she frequently is consulted by applicants about how to meet their social equity goals.

“This particular applicant explained to me and my staff how they ate from soup kitchens and food pantries when they were growing up and how important it was for them to support food insecurity,” Clay said.

Clay said she mentioned that churches operating food pantries often are overwhelmed with donations of turkeys at holiday time and it might be helpful for them to have freezers for storage.

“I said, ‘You could help by reaching out to churches, food pantries, community kitchens to see if there is a need for something like that.’ It was an example. It was not a directive, OK?” Clay said. “I said, ‘churches.’ I did not say a specific church.”

[SEC Executive Director] Ginne-Rae [Clay] calls me all the time. She calls because she is at odds with ... members of the council in terms of how they feel she is doing her job.

To distribute the initial $6 million, which was deemed a pilot program, the council contracted with six non-profits: The Prosperity Foundation of New Haven, the Hispanic Federation of Hartford, the Community Foundation of Eastern Connecticut, NEST of Waterbury, and two United Way chapters in Fairfield County in the midst of merging as the United Way of Coastal and Western Connecticut.

“We chose grant makers that were familiar with their communities,” Jefferson said. “So the bottom line is, we ran a pilot. Everyone in the state knew we were running a pilot. Our records were transparent.”

Natalie Braswell, the general counsel to Lamont, said the controversy has become personal with some of the players. Clay frequently calls her about the questions posed by Comer, who had stepped down as chair of the council and resumed the role at the urging of Braswell on behalf of the governor.

“Ginne-Rae calls me all the time. She calls because she is at odds with Andréa and other members of the council in terms of how they feel she is doing her job," Braswell said.

One of the governor's appointees to the council, Kelli-Marie Vallieres, the state's chief workforce officer, has sharply questioned Clay about the council's contract with Oaksterdam University, the provider of online training for licensees. Specifically, she questioned spending $700,000 to build an online platform for an institution already in the online education business.

Comer has challenged her about marketing expenses.

Are [the grants] serving the purpose they are supposed to serve? I don’t think anyone actually has the answer to that.

Braswell said she relays the concerns expressed by Clay to Comer but reinforces to the executive director that Comer enjoys the full confidence of the governor and that the questions raised are legitimate.

The Social Equity Council has latitude under the law in how it operates, but that does not mean its performance and programs should not be assessed, Braswell said.

"Are those things actually working? Are they serving the purpose they are supposed to serve?" Braswell said. "I don’t think anyone actually has the answer to that, because no one has ever said, 'Here are the metrics. Here's how we are going to review the programs, and here's how we are going to see how these dollars are actually contributing to the betterment of these communities.”

With limited success, the CT Mirror attempted to interview all the grant makers or reach the recipients of some of the largest individual grants: the Rivera Memorial Foundation of Waterbury, $216,000; and Blue Hills Civic Association in Hartford, $100,000.

Only Isabel Almeida, the president and chief executive of the United Way of Coastal and Western Connecticut, responded to calls for interviews and agreed to talk about the grants process, legislative complaints and the suspension of further grants.

The council provided broad latitude, she said.

“I don't believe we had a lot of guidance, other than the review process was really meant to be community-led and [involve] representatives of those impacted in the DIAs,” Almeida said. “And so the review process was really community focused, very inclusive and very thorough.”

The size and number of the grants varied by region. In the New Haven area, no one received more than $45,000. In the two areas handled by the United Way, a half-dozen nonprofits won multiple grants for different programs, providing $102,585 for one group and $216,000 for another.

Domus Kids, a Stamford-based nonprofit that runs a range of programs aimed at young people, was awarded three $72,000 grants for programs focused on workforce development, prison reentry and school engagement.

Could there be recommendations ... about how the process could be improved? Undoubtedly.

Almeida said United Way staff facilitated the selections.

“We were very intentional about ensuring that we selected community members who were trained to review grants and make the recommendations for funding,” she said. “These were individuals with lived experience, individuals from the local communities, people from diverse backgrounds.”

For the work, the grant makers were allowed to charge fees equal to 10% of grants awarded, she said. If the same process is used for subsequent funding, the fee is expected to be smaller, between 3% and 7%, she said.

Almeida encouraged lawmakers who felt shut out to sit down with the grant makers.

“Information is power. And if there are questions or concerns about how the process took place and how the decisions were made, I would encourage people to kind of sit with the groups and engage in conversation,” she said. “Could there be recommendations that they have about how the process could be improved? Undoubtedly. But if there are questions about how it took place, I think connecting with the organization and really diving in would be an important first step.”

The Social Equity Council has another $34 million available for grants, with $12 million earmarked for areas targeted by the Lamont administration, including housing and day care, and $22 million available to a grant process similar to the first one.

It is a relatively small pool of money compared to other grant programs. The competitive Community Investment Fund managed by the state Department of Economic and Community Development has an annual budget of $175 million and a commitment for five years of funding totaling $875 million.

Almeida was one of the leaders at four of the five grant makers who wrote to Lamont and the Social Equity Council urging that the suspension of the grant program be ended as quickly as possible. The grants are small but impactful, they said.

“Thanks to these funds, we have many examples of successfully expanding programming to benefit the formerly incarcerated population, as well as programs for at-risk youth in DIAs,” they wrote. “As was the intent, many grass-roots programs were expanded to create greater capacity to meet the needs of more disadvantaged constituents from the DIAs.”

While the initial awards offered no guarantee of continued funding, there was hope that programs expanded with community reinvestment funds would get continued support, Almeida said.

In separate interviews, Almeida and Jefferson both pushed back at suggestions that the first round of grants would not help with economic development in communities badly in need of jobs and career opportunities.

“You're talking to someone who believes very strongly that investing in our youth is investing in economic development, that ensuring that our kids are getting the support they need in school, after school, as they transition after graduation into the workforce, are important,” Almeida said.

Jefferson noted that economic development was not defined in the cannabis legalization law.

“We’re giving money to the grassroots. We're giving money to the nonprofits. The nonprofits do a great job keeping kids off the street and preventing chaos — helps the economy, right?” Jefferson said. “Giving money to organizations that address very pressing needs in our community is great for economic development. Economic development is a broad term.”

CT Mirror staff writer Andrew Brown contributed to this story.

Launched in 2010, The Connecticut Mirror specializes in in-depth news and reporting on public policy, government and politics. CT Mirror is nonprofit, non-partisan, and digital only.