ARPA Funds Meant for a Downtown Market Appear Diverted Toward Dispensary Linked to Former Regulator

By CT CannaTimes Staff - October 16, 2025

A formal fraud-risk review request has been submitted to the Connecticut Auditors of Public Accounts, calling for an investigation into the City of Middletown’s use of $2.5 million in ARPA funds earmarked for Main Street redevelopment.

The request alleges that federal ARPA dollars intended to support a public-facing grocery or market project at 428 Main Street — the former Woolworth’s building — appear to have been repurposed to facilitate a private cannabis dispensary to be operated by former Connecticut Department of Consumer Protection (DCP) Commissioner Gerald “Jerry” Farrell Jr. .

From Grocery to Dispensary: The “Scope Drift” Problem

Public documents and press coverage show a troubling shift in how Middletown’s redevelopment project was presented to the public.

Initial council and ARPA communications described the funding as addressing a “food access” or “market revitalization” goal — consistent with ARPA’s federal intent to improve community resilience and meet public needs. But by late 2024, the site had instead become the proposed location of a “high-end cannabis dispensary” tied to Farrell, who left his DCP post only a few years prior .

• November 22, 2024: The Middletown Press reported Farrell’s role in the proposed dispensary plan.

https://www.middletownpress.com/news/article/middletown-ct-cannabis-retail-dispensary-main-st-19932510.php

• February–April 2025: City officials and residents raised alarms that the ARPA-funded redevelopment was “never intended” to subsidize cannabis retail.

https://www.middletownpress.com/news/article/middletown-cannabis-dispensary-ct-gerald-farrell-20267333.php

• April 9, 2025: Middletown’s Common Council formally referred the issue back to the ARPA Committee after questions surfaced about whether the project violated the original public-use commitments.

https://www.ctinsider.com/news/article/middletown-cannabis-ct-dispensary-zoning-arpa-20389262.php

By June 2025, amid mounting scrutiny, the developer withdrew the dispensary application altogether — but only after months of confusion and public pushback.

https://www.middletownpress.com/news/article/middletown-cannabis-ct-dispensary-zoning-arpa-20389262.php

Potential Statutory and Federal Violations

If verified, the repurposing of ARPA funds from a public market project to a private cannabis dispensary could raise several legal and ethical red flags, including:

• Misrepresentation of grant purpose — Possible violation of 2 C.F.R. § 200.303 (Federal grant internal control requirements) and 31 U.S.C. § 3729 (False Claims Act) if funds were awarded under false or misleading premises.
• Improper conflict of interest — Under 5 C.F.R. § 2635.502 and Conn. Gen. Stat. § 1-84, former state officials are prohibited from using their prior agency position or connections to benefit personally or secure contracts.
• Breach of ARPA reporting compliance — Potential violations of Treasury’s Interim Final Rule (31 CFR Part 35), which requires funds to be spent consistently with the purpose publicly represented to the community.

These concerns are precisely why the Connecticut Auditors of Public Accounts are being asked to open a fraud-risk review and preserve all grant records, communications, and change orders related to the 428 Main Street project .

A Pattern of ARPA Misuse?

This is not the first time questions have been raised about Connecticut’s handling of federal pandemic recovery funds. Similar concerns have emerged about state-level grant routing, political favoritism, and “scope drift” in ARPA-funded programs — issues that the U.S. Treasury’s Inspector General has warned states to monitor closely.

The Middletown case stands out because of the direct appearance of a former regulator as the intended private beneficiary — an arrangement that would demand strong ethical screening and transparency to avoid the perception of insider advantage.

Why It Matters

At a time when Connecticut residents are struggling with housing costs and food insecurity, using federal relief money to subsidize a luxury cannabis retail location would represent a betrayal of public trust and ARPA’s core mission.

The documented sequence — public funding for a “market,” evolving into a private dispensary tied to a former regulator, then quietly withdrawn amid oversight resistance — warrants immediate investigation to restore transparency and accountability.

Full Document (Fraud-Risk Review Request)

Source document: Fraud Alert Request – Middletown ARPA funds diverted from grocery/market to cannabis dispensary proposal (October 2025)

https://www.middletownpress.com/news/article/middletown-cannabis-dispensary-arpa-grocery-ct-20312679.php

https://www.ctinsider.com/news/article/middletown-cannabis-ct-dispensary-zoning-arpa-20389262.php

CT CannaTimes Calls for Action

We join this call for a formal investigation by

:

• The Connecticut Auditors of Public Accounts,

• The Office of the Attorney General, and

• The U.S. Department of the Treasury Office of Inspector General,

to determine whether Middletown’s use of ARPA funds was consistent with law and whether any undue influence or conflicts of interest occurred.

Transparency and accountability are not optional — they are essential.

State Senator Rob Sampson