Connecticut 2021 Regular Session

Connecticut Senate Bill SB01095 Compare Versions

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	9	+	General Assembly Raised Bill No. 1095
8	10		January Session, 2021
	11	+	LCO No. 6491
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	14	+	Referred to Committee on FINANCE, REVENUE AND
	15	+	BONDING
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	18	+	Introduced by:
	19	+	(FIN)
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12	24		AN ACT EXPANDING THE ANGEL INVESTOR TAX CREDIT
13	25		PROGRAM TO SOCIAL EQ UITY APPLICANTS.
14	26		Be it enacted by the Senate and House of Representatives in General
15	27		Assembly convened:
16	28
17	29		Section 1. Section 12-704d of the general statutes is repealed and the 1
18	30		following is substituted in lieu thereof (Effective July 1, 2021): 2
19	31		(a) As used in this section: 3
20	32		(1) "Angel investor" means an accredited investor, as defined by the 4
21	33		Securities and Exchange Commission, or network of accredited 5
22	34		investors who review new or proposed businesses for potential 6
23	35		investment and who may seek active involvement, such as consulting 7
24	36		and mentoring, in a qualified Connecticut business or a qualified 8
25	37		cannabis business, but "angel investor" does not include (A) a person 9
26	38		controlling fifty per cent or more of the Connecticut business or cannabis 10
27	39		business invested in by the angel investor, (B) a venture capital 11
28	40		company, or (C) any bank, bank and trust company, insurance 12
29		-	company, trust company, national bank, savings association or building 13
	41	+	company, trust company, national bank, savings association or building 13 Raised Bill No. 1095
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30	47		and loan association for activities that are a part of its normal course of 14
31	48		business; 15
32	49		(2) "Cash investment" means the contribution of cash, at a risk of loss, 16
33	50		to a qualified Connecticut business or a qualified cannabis business in 17
34		-	exchange for qualified securities; 18 Substitute Bill No. 1095
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	51	+	exchange for qualified securities; 18
41	52		(3) "Connecticut business" means any business with its principal 19
42	53		place of business in Connecticut, excluding a cannabis business; 20
43	54		(4) "Bioscience" means manufacturing pharmaceuticals, medicines, 21
44	55		medical equipment or medical devices and analytical laboratory 22
45	56		instruments, operating medical or diagnostic testing laboratories, or 23
46	57		conducting pure research and development in life sciences; 24
47	58		(5) "Advanced materials" means developing, formulating or 25
48	59		manufacturing advanced alloys, coatings, lubricants, refrigerants, 26
49	60		surfactants, emulsifiers or substrates; 27
50	61		(6) "Photonics" means generation, emission, transmission, 28
51	62		modulation, signal processing, switching, amplification, detection and 29
52	63		sensing of light from ultraviolet to infrared and the manufacture, 30
53	64		research or development of opto-electronic devices, including, but not 31
54	65		limited to, lasers, masers, fiber optic devices, quantum devices, 32
55	66		holographic devices and related technologies; 33
56	67		(7) "Information technology" means software publishing, motion 34
57	68		picture and video production, teleproduction and postproduction 35
58	69		services, telecommunications, data processing, hosting and related 36
59	70		services, custom computer programming services, computer system 37
60	71		design, computer facilities management services, other computer 38
61	72		related services and computer training; 39
62	73		(8) "Clean technology" means the production, manufacture, design, 40
63	74		research or development of clean energy, green buildings, smart grid, 41
64	75		high-efficiency transportation vehicles and alternative fuels, 42
65		-	environmental products, environmental remediation and pollution 43
	76	+	environmental products, environmental remediation and pollution 43 Raised Bill No. 1095
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66	82		prevention; 44
67	83		(9) "Qualified securities" means any form of equity, including a 45
68	84		general or limited partnership interest, common stock, preferred stock, 46
69	85		with or without voting rights, without regard to seniority position that 47
70		-	must be convertible into common stock; [and] 48 Substitute Bill No. 1095
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	86	+	must be convertible into common stock; [and] 48
77	87		(10) "Emerging technology business" means any business that is 49
78	88		engaged in bioscience, advanced materials, photonics, information 50
79	89		technology, clean technology or any other emerging technology as 51
80	90		determined by the Commissioner of Economic and Community 52
81	91		Development; 53
82	92		(11) "Cannabis business" means a cannabis establishment for which a 54
83	93		social equity applicant has been granted a provisional license or a 55
84	94		license; 56
85	95		(12) "Social equity applicant" means a person that has applied for a 57
86	96		license for a cannabis establishment, where such establishment (A) is at 58
87	97		least fifty-one per cent owned by an individual or individuals whose 59
88	98		primary addresses for the five years immediately preceding the date of 60
89	99		such application are in this state and who meet at least one of the 61
90	100		following criteria, or (B) is under the day-to-day control of an individual 62
91	101		or individuals whose primary addresses for the five years immediately 63
92	102		preceding the date of such application are in this state and at least fifty-64
93	103		one per cent of whom meet at least one of the following criteria: 65
94	104		(i) The individual was, as an adult or as a juvenile, arrested for or 66
95	105		convicted of, the sale, possession, use, manufacture or cultivation of 67
96	106		cannabis; 68
97	107		(ii) The individual has a parent, spouse or child who was, as an adult 69
98	108		or as a juvenile, arrested for or convicted of the sale, possession, use, 70
99	109		manufacture or cultivation of cannabis; 71
100	110		(iii) The individual has been a resident of a disproportionately 72
101		-	affected community for not less than five of the ten years immediately 73
	111	+	affected community for not less than five of the ten years immediately 73 Raised Bill No. 1095
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102	117		preceding the date of such application; or 74
103	118		(iv) The individual is a resident of tribal land; 75
104		-	(13) "Cannabis" means marijuana, as defined in section 21a-240; 76
105		-	(14) "Cannabis establishment" has the same meaning as provided in 77 Substitute Bill No. 1095
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112		-	section 1 of substitute senate bill 888 of the current session; and 78
	119	+	(13) "Cannabis" means "marijuana", as defined in section 21a-240; 76
	120	+	(14) "Cannabis establishment" has the same meaning as provided in 77
	121	+	section 1 of senate bill 888 of the current session; and 78
113	122		(15) "Disproportionately affected community" means any of the top 79
114	123		twenty communities on the most recent Public Investment Community 80
115	124		index prepared by the Office of Policy and Management in accordance 81
116	125		with the provisions of section 7-545 or a census tract in any municipality 82
117	126		in which the unemployment rate is greater than the state-wide 83
118	127		unemployment rate and the percentage of residents of such 84
119	128		municipality below the federal poverty level is greater than the state-85
120	129		wide percentage of residents below the federal poverty level. 86
121	130		(b) There shall be allowed a credit against the tax imposed under this 87
122	131		chapter, other than the liability imposed by section 12-707, for a cash 88
123	132		investment by an angel investor of not less than twenty-five thousand 89
124	133		dollars in the qualified securities of a Connecticut business [by an angel 90
125	134		investor] or a cannabis business. The credit shall be in an amount equal 91
126	135		to (1) twenty-five per cent of such investor's cash investment in a 92
127	136		Connecticut business, or (2) forty per cent of such investor's cash 93
128	137		investment in a cannabis business, provided the total tax credits allowed 94
129	138		to any angel investor shall not exceed five hundred thousand dollars. 95
130	139		The credit shall be claimed in the taxable year in which such cash 96
131	140		investment is made by the angel investor. The credit may be sold, 97
132	141		assigned or otherwise transferred, in whole or in part. 98
133	142		(c) To qualify for a tax credit pursuant to this section, a cash 99
134	143		investment shall be in: [a] 100
135	144		(1) A Connecticut business that [(1)] (A) has been approved as a 101
136	145		qualified Connecticut business pursuant to subsection (d) of this section; 102
137		-	[(2)] (B) had annual gross revenues of less than one million dollars in the 103
	146	+	[(2)] (B) had annual gross revenues of less than one million dollars in the 103 Raised Bill No. 1095
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138	152		most recent income year of such business; [(3)] (C) has fewer than 104
139	153		twenty-five employees, not less than seventy-five per cent of whom 105
140	154		reside in this state; [(4)] (D) has been operating in this state for less than 106
141	155		seven consecutive years; [(5)] (E) is primarily owned by the 107
142	156		management of the business and their families; and [(6)] (F) received 108
143		-	less than two million dollars in cash investments eligible for the tax 109 Substitute Bill No. 1095
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	157	+	less than two million dollars in cash investments eligible for the tax 109
150	158		credits provided by this section; or 110
151	159		(2) A cannabis business that (A) has been approved as a qualified 111
152	160		cannabis business pursuant to subsection (d) of this section; (B) had 112
153	161		annual gross revenues of less than one million dollars in the most recent 113
154	162		income year of such business; (C) has fewer than twenty-five employees, 114
155	163		not less than seventy-five per cent of whom reside in this state; (D) is 115
156	164		primarily owned by the management of the business and their families; 116
157	165		and (E) received less than two million dollars in cash investments 117
158	166		eligible for the tax credits provided by this section. 118
159	167		(d) (1) A Connecticut business or a cannabis business may apply to 119
160	168		Connecticut Innovations, Incorporated, for approval as a Connecticut 120
161	169		business or cannabis business, as applicable, qualified to receive cash 121
162	170		investments eligible for a tax credit pursuant to this section. The 122
163	171		application shall include (A) the name of the business and a copy of the 123
164	172		organizational documents of such business, (B) a business plan, 124
165	173		including a description of the business and the management, product, 125
166	174		market and financial plan of the business, (C) a description of the 126
167	175		business's innovative technology, product or service, (D) a statement of 127
168	176		the potential economic impact of the business, including the number, 128
169	177		location and types of jobs expected to be created, (E) a description of the 129
170	178		qualified securities to be issued and the amount of cash investment 130
171	179		sought by the [qualified Connecticut] business, (F) a statement of the 131
172	180		amount, timing and projected use of the proceeds to be raised from the 132
173	181		proposed sale of qualified securities, and (G) such other information as 133
174	182		the chief executive officer of Connecticut Innovations, Incorporated, 134
175	183		may require. 135
176		-	(2) Said chief executive officer shall, on a monthly basis, compile a list 136
	184	+	(2) Said chief executive officer shall, on a monthly basis, compile a list 136 Raised Bill No. 1095
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177	190		of approved applications, categorized by the cash investments being 137
178	191		sought by the qualified Connecticut business or the qualified cannabis 138
179	192		business and type of qualified securities offered. 139
180	193		(e) (1) Any angel investor that intends to make a cash investment in 140
181		-	a business on such list may apply to Connecticut Innovations, 141 Substitute Bill No. 1095
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	194	+	a business on such list may apply to Connecticut Innovations, 141
188	195		Incorporated, to reserve a tax credit in the amount indicated by such 142
189	196		investor. Connecticut Innovations, Incorporated, shall not reserve tax 143
190	197		credits under this section for any investment made on or after July 1, 144
191	198		2024. 145
192	199		(2) The aggregate amount of all tax credits under this section that may 146
193	200		be reserved by Connecticut Innovations, Incorporated, shall not exceed 147
194	201		(A) for cash investments made in Connecticut businesses, six million 148
195	202		dollars annually for the fiscal years commencing July 1, 2010, to July 1, 149
196	203		2012, inclusive, and [shall not exceed] five million dollars [in] for each 150
197	204		fiscal year thereafter, and (B) for cash investments made in qualified 151
198	205		cannabis businesses, fifteen million dollars annually for each fiscal year 152
199	206		commencing on or after July 1, 2021. [Each fiscal year,] 153
200	207		(3) With respect to the tax credits available under this section for 154
201	208		investments in Connecticut businesses, Connecticut Innovations, 155
202	209		Incorporated, shall not reserve more than seventy-five per cent of [the] 156
203	210		such tax credits [available under this section] each fiscal year for 157
204	211		investments in emerging technology businesses, except if any such 158
205	212		credits remain available for reservation after April first in any fiscal 159
206	213		year, such remaining credits may be reserved for (A) investments in 160
207	214		such businesses [,] and may be prioritized for veteran-owned, women-161
208	215		owned or minority-owned businesses and businesses owned by 162
209	216		individuals with disabilities, and (B) investments in qualified cannabis 163
210	217		businesses. [Connecticut Innovations, Incorporated, shall not reserve 164
211	218		tax credits under this section for any investment made on or after July 165
212	219		1, 2024.] 166
213	220		[(2)] (4) The amount of the credit allowed to any investor pursuant to 167
214		-	this section shall not exceed the amount of tax due from such investor 168
	221	+	this section shall not exceed the amount of tax due from such investor 168 Raised Bill No. 1095
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215	227		under this chapter, other than section 12-707, with respect to such 169
216	228		taxable year. Any tax credit that is claimed by the angel investor but not 170
217	229		applied against the tax due under this chapter, other than the liability 171
218	230		imposed under section 12-707, may be carried forward for the five 172
219	231		immediately succeeding taxable years until the full credit has been 173
220		-	applied. 174 Substitute Bill No. 1095
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	232	+	applied. 174
227	233		(f) If the angel investor is an S corporation or an entity treated as a 175
228	234		partnership for federal income tax purposes, the tax credit may be 176
229	235		claimed by the shareholders or partners of the angel investor. If the 177
230	236		angel investor is a single member limited liability company that is 178
231	237		disregarded as an entity separate from its owner, the tax credit may be 179
232	238		claimed by such limited liability company's owner, provided such 180
233	239		owner is a person subject to the tax imposed under this chapter. 181
234	240		(g) A review of the cumulative effectiveness of the credit under this 182
235	241		section shall be conducted by Connecticut Innovations, Incorporated, by 183
236	242		[July 1, 2014, and by] July first annually. [thereafter.] Such review shall 184
237	243		include, but need not be limited to, the number and type of Connecticut 185
238	244		businesses and cannabis businesses that received angel investments, the 186
239	245		number of angel investors and the aggregate amount of cash 187
240	246		investments, the current status of each Connecticut business and 188
241	247		cannabis business that received angel investments, the number of 189
242	248		employees employed in each year following the year in which such 190
243	249		Connecticut business or cannabis business received the angel 191
244	250		investment [,] and the economic impact in the state [,] of the Connecticut 192
245	251		business or cannabis business that received the angel investment. Such 193
246	252		review shall be submitted to the Office of Policy and Management and 194
247	253		to the joint standing committee of the General Assembly having 195
248	254		cognizance of matters relating to commerce, in accordance with the 196
249	255		provisions of section 11-4a. 197
250	256		This act shall take effect as follows and shall amend the following
251	257		sections:
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253	259		Section 1 July 1, 2021 12-704d
	260	+	Raised Bill No. 1095
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255		-	Statement of Legislative Commissioners:
256		-	In Section 1(a)(14), "substitute" was added for accuracy.
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258		-	FIN Joint Favorable Subst. -LCO
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	266	+	Statement of Purpose:
	267	+	To expand the angel investor tax credit program to cannabis
	268	+	establishments for which social equity applicants have been granted
	269	+	provisional licenses or licenses.
	270	+	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
	271	+	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
	272	+	underlined.]
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