Connecticut social equity licensees, including at least 38 of them, are pushing the legislature to amend the law in order to let them cash out of their industry after only three years rather than the seven-year requirement originally written into the regulations.
Several of the 38 – which entered into “equity joint ventures” with financiers to get their businesses operational – want permission to sell their majority stakes to the minority owners, the CT Mirror reported, and lawmakers are weighing that with House Bill 7178.
The fate of the bill is not yet clear.
In any field, seven years can be a long time. Many things can change. Derrick Gibbs said that seven years would be an extended period of time if a business venture was not doing well.
Why, on the other side, should an owner of social equity not be allowed to sell their shares at a financially advantageous time? The Mirror quoted Gibbs.
One licensee noted that social equity investors are not barred from selling ownership stakes, but non-equity firms are. This is an issue of basic fairness.
Some legislators were reluctant to make this adjustment and claimed that it would lead to the exact opposite of what they were hoping to achieve with their social equity program: a market dominance from large multistate operators, instead of a vibrant small business community.
After three years, what is the final product? “Is the product more corporately controlled, and is there less community-owned or community-supported enterprise across the State?” Roland Lemar, state representative said. “I’m really concerned.”
The state House of Representatives and Senate have yet to vote on the bill.