SEC Moves to Cut the Social Equity Exit Rule From Seven Years to Three Through DCP E-Regulations

Hartford, CT — 12.16.2025

Connecticut lawmakers warned this would happen. They warned who it would benefit. They warned it would gut social equity. And now, despite those warnings being made on the record, the Social Equity Council has formally proposed the very change legislators said would invite buyouts and push equity owners out.

On November 28, 2025, the Social Equity Council (SEC) filed eRegulation PR2025-027, a proposed rule that defines a “restricted period” for social equity ownership as provisional licensure plus only three years after final licensure—a dramatic rollback from the seven-year protections lawmakers deliberately put in place to prevent predatory takeovers.

The proposal was filed by Mariedy Collazo Cruz, Legal Advisor to the SEC, and is now open for public comment.

What makes this proposal explosive isn’t just what it does. It’s that Connecticut officials already said—clearly, repeatedly, and in writing—that this exact change harms social equity.

“We’re going to lose the entire social equity population.”

The warning came first from the legislature.

On February 22, 2024, during a General Law Committee public hearing on HB 5150 at the Legislative Office Building, Rep. Mike D’Agostino, House Chair of the General Law Committee, responded directly to industry requests to shorten equity ownership requirements.

His words were blunt:

“If we let them sell within a year, they’re going to get bought out, and then we’re going to lose the entire social equity population.”

— Rep. Mike D’Agostino, House Chair, General Law Committee

Public hearing on HB 5150, Feb. 22, 2024

He followed with an even sharper rebuke about who was pushing for the change:

“We need to hear from social equity partners directly, not a couple of rich white guys.”

— Rep. Mike D’Agostino

HB 5150 hearing, Feb. 22, 2024

And he closed the door:

“I, for one, am not willing to unwind that two years into a program.”

— Rep. Mike D’Agostino

HB 5150 hearing, Feb. 22, 2024

Those weren’t off-hand comments. They were statements of legislative intent.

Who asked for the 3-year rule in the first place

The request to shorten the seven-year protection didn’t come from patients or equity applicants. It came from well-capitalized operators.

At that same February 22, 2024 hearing, Carl Tirella, Co-Founder of Budr Cannabis, testified on behalf of Budr, an Equity Joint Venture retailer.

He asked lawmakers to replace the seven-year rule with three years:

“We believe our social equity applicants are disadvantaged by being held to a seven-year moratorium on ownership transfers. Seven years is a long time in any industry.”

— Carl Tirella, Co-Founder, Budr Cannabis

General Law Committee hearing on HB 5150, Feb. 22, 2024

Then he made the request explicit:

“We believe this holding period should mirror the three-year period required for social equity lottery winners, and we ask that the committee consider adding this change to the legislation.”

— Carl Tirella, Budr Cannabis

HB 5150 hearing, Feb. 22, 2024

Ben Zachs, COO of Fine Fettle, echoed the same theme during the hearing, pointing out that non-equity partners can sell while equity partners cannot.

The legislature said no.

A year later, the same concern—written into the record

Fast forward to March 26, 2025.

During a SEC-related Legislative Committee meeting (held virtually at 4:00 PM), the issue resurfaced—not as testimony, but as a documented legislative concern tied to HB 7181.

The official meeting minutes state:

“A proposed change reducing the required ownership period for social equity entrepreneurs from seven years to three years, raising concerns about potential exploitation.”

— Legislative Committee Meeting Minutes (Draft)

The committee didn’t mince words:

“Committee members debated the implications of the proposed three-year ownership requirement, considering whether it aligns with social equity goals.”

— Legislative Committee Meeting Minutes, March 26, 2025

And the warning returned—nearly word for word:

“Concerns were raised about ensuring that social equity applicants are not pushed out of the market prematurely.”

— Legislative Committee Meeting Minutes, March 26, 2025

This wasn’t ignorance. This was explicit awareness.

Then came the quiet pivot

By September 18, 2025, the discussion had moved inside the Social Equity Council’s Policy & Governance Committee, chaired by Ed Shirley, with Executive Director Brandon McGee and Legal Advisor Mariedy Collazo Cruz present.

The minutes show the Council acknowledging structural barriers—and signaling a shift:

“Current statute prohibits adding backers to an application until final licensure.”

— SEC Policy & Governance Committee Minutes, Sept. 18, 2025

“Applicants may lose financial backing during provisional stages but cannot secure new investors until final licensure.”

— SEC Policy & Governance Committee Minutes

Then the key line:

“Staff and stakeholders are exploring statutory amendments to allow greater flexibility.”

— SEC Policy & Governance Committee Minutes, Sept. 18, 2025

The stage was set.

November 28, 2025: The proposal lands anyway

On November 28, 2025, the SEC formally filed PR2025-027 in the Connecticut eRegulations system.

The proposed rule defines the “restricted period” as:

“…the period of provisional licensure … and the three years following the issuance of final license.”

— Proposed Regulation PR2025-027, filed by Mariedy Collazo Cruz, Legal Advisor, SEC

The Statement of Purpose confirms the rollback:

“To prevent the sale or change in ownership or control … during the period of provisional licensure, and for three years following the issuance of a final license.”

— PR2025-027, Statement of Purpose

This is the same three-year outcome lawmakers warned against.

Why this matters

Seven years wasn’t arbitrary. It was a guardrail.

Legislators said—on the record—that shortening it would lead to:

• Buyouts
• Premature exits
• Loss of true equity ownership
• Well-capitalized interests absorbing licenses

Those warnings were repeated in 2024. They were memorialized in 2025 legislative minutes.

And now, they’re being overridden through regulation.

Public comment is open

PR2025-027 is currently open for public comment through the Connecticut eRegulations system.

The question now isn’t whether Connecticut was warned.

It’s whether anyone in power is still listening.

— CT CannaTimes