by Staff Report
Hartford, CT — Cannabis businesses in three Connecticut towns have agreed to pay more than $400,000 in penalties to resolve allegations that they violated the state’s Responsible and Equitable Regulation of Adult-Use Cannabis Act (RERACA), the state’s antitrust act and the Connecticut Unfair Trade Practices Act (CUTPA).
Attorney General William Tong announced on Jan. 12 that his office had reached a $416,000 settlement with three cannabis establishment licensees in Bridgeport, East Hartford and Cromwell operating under the “Crisp Cannabis” brand, along with the company seeking to acquire them, Mohave CT LLC, and the principals of all entities.
According to a statement from Tong’s office, an investigation found that the businesses and their principals engaged in conduct amounting to “gun jumping” — the premature transfer of operational control and beneficial ownership among multiple licensees — prior to filing the notice of material change required by RERACA. Evidence showed that the acquiring entity assumed decision-making authority and coordinated the operations, branding, and staffing of three separate cannabis establishments for more than 100 days before notifying regulators, Tong said.
This alleged coordination effectively eliminated the licensees’ competitive independence, consolidating them into a single enterprise before the attorney general’s merger review could occur, in violation of RERACA’s notice and waiting-period requirements, according to the statement.
Crisp Cannabis did not immediately return an email seeking comment.
Tong said the investigation also identified additional alleged violations under Connecticut’s antitrust and competition laws. Per the agreement, the businesses and their principals allegedly exchanged competitively sensitive business information, including pricing and operational data, with the effect of aligning commercial strategies and reducing uncertainty among nominally independent competitors, in violation of the Connecticut Antitrust Act. Further, the coordinated conduct among multiple licensees operating under a de facto common enterprise was found to frustrate RERACA’s clear public policy of maintaining a fair and competitive licensing system, constituting an unfair method of competition in violation of CUTPA, Tong said.
“When the legislature created Connecticut’s adult-use cannabis market, it built in safeguards like the 2021 notice of material change pre-merger notification statute to protect competition and prevent market concentration before it starts,” Tong said. “This is the first enforcement action of its kind under that framework, and it underscores both the growth of this industry and the seriousness of the obligations that come with it.”
Tong said the goal was to hold companies accountable and to ensure that all participants understand the rules designed to keep Connecticut’s cannabis industry fair, transparent, and competitive for consumers and lawful operators.
“We will continue to vigorously enforce these requirements, along with the state’s antitrust and unfair competition laws, to safeguard fair competition and protect the integrity of this growing industry,” he said.
Under the settlement, the respondents will jointly and severally pay a civil penalty of $416,000, including $104,000 due within 30 days and $312,000 deferred contingent upon full compliance with the agreement. Jointly and severally means each respondent bears responsibility for the full amount. The respondents also agreed to implement a comprehensive antitrust compliance program and to refrain from any future violations of RERACA, the Connecticut Antitrust Act, or CUTPA.
Tong said the respondents cooperated fully with the investigation.