CT is getting its 7th large cannabis grower as companies weigh whether the market is worth it

Kepal Patel hopes that before the year ends, seeds will be planted at his company’s 40,000-square-foot indoor cannabis farm in Stratford, and within the first half of the new year, the facility will be ready for a harvest.

That would make Borealis Cannabis by Shangri-La the seventh large-scale cannabis cultivator open and operating in Connecticut. The others include four medical cannabis producers that expanded into the recreational market after legalization in 2021, outdoor grower Rodeo Cannabis in Morris and indoor cultivator Fine Fettle in Bloomfield.

Each facility has at least 15,000 square feet of grow space. Patel, president of Shangri-La, said the company has spent about $34 million on its Borealis facility. It has more than 20,000 square feet of grow space and is expected to produce 1,000 pounds of trimmed flower each month while employing 80 people.

“We went all out because (of a) lack of market we saw in Connecticut,” he said. “A lot of the consumers here in Connecticut are going to different states right now because of the lack of different product availability and quality as well as the price.”

Ben Zachs, chief operating officer of retailer Fine Fettle, agreed that more variety in cannabis would be good for the state. But overall, he said the market is in “a pretty healthy spot” with a strong supply. The average price per gram of usable cannabis has dropped to about $8 from a high of about $13 at dispensaries in the state, according to state data.

“It’s still, though, really competitive, like people are not making money hand over fist,” Zachs said. “So it’s not like there’s a ton of demand outweighing the supply. I’d argue we probably are a little oversupplied, but it’s somewhat right size."

Lila McKinley, director of the Department of Consumer Protection’s cannabis division, said that with cannabis, the state is trying to avoid either an undersupply, which would result in higher prices, or an oversupply, which would mean lower prices for consumers but an increased risk of people diverting products to the illicit market.

“It’s definitely not an easy balance to strike because you’re talking about an agricultural product,” she said. “So you’re talking about products that have, obviously, yields every season or every growth cycle, and so it can be kind of difficult to get a good read on that.”

In addition to the six operating cultivators, there are six “micro-cultivators” operating in the state that started with 2,000 to 10,000 square feet of grow space and could gradually expand with approval from the Department of Consumer Protection. 

Another 14 businesses have provisional cultivator or micro-cultivator licenses. 

So why doesn’t the state have a total of 26 growers in operation today? Cannabis business executives said opening a cultivation facility is a long, expensive process that requires having significant capital, finding a location that meets their needs and state requirements, and following a host of regulations after deciding whether Connecticut’s market is worth the investment.

Zachs said he expects one or two more cultivators to start operations in 2026. The largest barrier to starting up a facility, he said, is the cost. 

“To build a large cultivation (facility) in the state, you need to have 15,000 square feet of canopy,” Zachs said. “To build 15,000 square feet of canopy, you need to have, at minimum, a roughly 40,000-square-foot building because you need the side space, you need the drying space.”

Rodeo Cannabis and Fine Fettle — and Shangri-La, on a provisional basis — were licensed as “disproportionately impacted area” cultivators. That meant that their facilities needed a certain amount of square footage and also had to be located in certain census tracts considered disproportionately harmed by the war on drugs. 

After obtaining zoning approvals, they had more requirements to meet during construction, including using union labor, Zachs and Patel said.
“All of those regulations we had to follow to the ‘T,’ so that took a significantly longer time than expected,” Patel said.

It’s a venture that comes with risk, Zachs said. Businesses have to weigh the millions of dollars in costs with the possible returns from the state’s market, which hasn’t grown as much as some had hoped. 

“I think that the reality is that operators have looked at Connecticut and said, ‘Should we do this or not? ’” Zachs said. “And a lot of people have said… ‘The juice is not worth the squeeze of the market.’”

Both Fine Fettle and Shangri-La have also opened multiple dispensaries in Connecticut since recreational cannabis sales began in 2023 and have stores in other states.

Rino Ferrarese, president of micro-cultivator Affinity Grow in Portland, Conn., said launching a cultivation site is a cost-intensive endeavor no matter the size of the facility. 

Affinity Grow paid about $4 million for its building, which was previously owned by cannabis grower CTPharma, and spent $2.5 million on renovations. 

Lighting and heating, ventilation and air conditioning systems pose some of the biggest costs during construction, Ferrarese said. Once an indoor grow facility is operational, electricity is the largest expense, he said.

Another challenge new cultivators face is quality testing, he said.

“A lot of the science that’s baked into testing products today is devoid of science, and that stems, really, from the fact that there is no federal standard in place,” Ferrarese said. “Every state program has drafted its own quality testing requirements, and they’re consistently different.” 

The plant itself makes testing difficult, Ferrarese said. A bud from one part of the plant could, for instance, have a higher concentration of the psychoactive component THC than a bud from another part.

An aspiring grower “might be thinking about a location and lights and plants and grow tables and nutrients — and that’s great. That’s all very important,” Ferrarese said. “But also downstream, you’re also going to have to have a plan in place for meeting the requirements for getting your product to market.”

McKinley, from the Department of Consumer Protection, said the state’s testing standards are “based on what is the most relevant science out there” and were developed after reviewing what other states have done. 

“As the industry sort of gains its legs, both nationally and on the state level, the testing will always sort of evolve with the most recent science,” she said.

As a micro-cultivator, Affinity Grow can apply to expand its grow space by 5,000 square feet per year, but Ferrarese said it hasn’t done so yet “because the market is full right now with lots of products.”

“I don’t know what the future is going to hold … and what the market will look like this time in 2026, and what anybody’s place will be within that market,” he said.

This story includes prior reporting by Staff Writer Jordan Fenster.