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 Section 12-704d of the general statutes is repealed and the 1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