Connecticut Comptroller Sean Scanlon announced the conclusion of his investigation into the Social Equity Council (SEC) found “common and concerning issues with the license application process, and the Council’s management of it,” according to the report.

The Office of the State Comptroller (OSC) was tapped by Gov. Ned Lamont to look into the SEC following reports in the media indicating possible improprieties.

The OSC noted a lack of communication and guidance provided by SEC staff to applicants; frequent changes to the social equity criteria without proper notice; delays and additional costs for applicants, and an overall lack of transparency in the evaluation process.

But the investigation also described alarming instances in which applicants said Council members “took advantage of the ambiguity, describing instances where Council staff stated that donation amounts were not enough, strongly suggested that applicants work with churches, denied plans because Council staff didn’t agree with what the Disproportionately Impacted Area (DIA) community was asking for, and showed preference toward helping or working solely with black and brown individuals rather than including other communities also impacted by the war on drugs in general.” 

The SEC was also unable to provide bid documentation for $90,575 worth of “community outreach service contracts,” and the OSC found a loan program for social equity applicants administered by the SEC had wait times ranging from 16 days to nine months. 

“For three of the applicants that received final approval, as of August 1, 2024, between six and eight months have passed since receiving approval and funds have still not been disbursed,” the OSC wrote. According to the audit, the SEC is currently sitting on $34 million and took in $5.6 million in 2024.

The report also found an “unhealthy work environment within the Council,” as members described stressed relationships, confusion, a lack of guidance, and uncertainty among staff. 

Gov. Ned Lamont asked Comptroller Scanlon to look into the Social Equity Council after reports surfaced of the Council misspending money or directing social equity funds toward their preferred nonprofit groups.

The SEC, formed to ensure Connecticut’s legalized recreational cannabis law would benefit those most affected by the war on drugs, has faced criticism from the beginning as the overly complex path toward gaining a retail cannabis license led to concerns that Connecticut’s cannabis law may be equitable in name only.

The cost and lottery process of the state’s cannabis licensure system has been called into question, and the funds SEC is meant to distribute to nonprofits have landed, allegedly, in some preferred organizations rather than being distributed equitably, according to CT Mirror.

SEC Executive Director Ginnie-Rae Clay resigned amidst accusations she encouraged an applicant to donate to her church, which also received a $15,000 grant funded by the SEC through an intermediary. Clay denies those accusations and insinuations. Hartford Courant columnist Kevin Rennie also reported on spending by the SEC for odd items like lip balm, and $35,000 for an in-state conference. 

“While we found no evidence of criminal wrongdoing that warranted a referral to law enforcement during our examination, it is important to note that the Office of the Comptroller does not possess subpoena power,” the report said. “All documents described throughout were given on a voluntary basis and all interviews were conducted on a voluntary basis. Most of the interviewees confirmed that Council staff communicated with them via telephone, rather than in writing.”

The OSC made several recommendations in the audit for moving forward: to eliminate “subjectivity,” and “establish objective and clear criteria and consistent procedures to evaluate applicants;” create a strategic plan; define in statute how the Council should use appropriated funds, and require annual ethics training for Council members.

The OSC also recommended that the SEC be more transparent, improve and increase communication throughout the organization and with applicants, and “retain all supporting documentation related to the contracting process.”

“As Connecticut’s fiscal watchdog, it is my job to ensure taxpayer dollars are being spent effectively and responsibly,” Scanlon said in a press release. “Over the past four months, my office has thoroughly examined the Social Equity Council, and this morning we are presenting both our findings and recommendations for how we can strengthen the integrity and effectiveness of this program.”

Connecticut’s legalized recreational cannabis industry has continued to grow, posting a record-breaking $18 million in sales for the month of August, according to the Department of Consumer Protection.

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