The New York State Cannabis Social Equity Investment Fund, a joint public-private effort, aimed at supporting individuals affected by the unequal enforcement of cannabis prohibition might look good on paper but may not be very efficient or fair in reality. As it turns out, the 10-year loans offered to dispensary owners to cover lease, property management and litigation expenses as well as store build-outs, are not proving to be as flexible as anticipated.
Exorbitant Interest Rates
According to loan documents acquired by THE CITY, justice-impacted dispensary operators could face interest rates as high as 18% on ten-year loans for business expansion, while having limited control over the operations.
Licensees of the Conditional Adult-Use Retail Dispensary (CAURD) in New York are obliged to sign loan documents to secure financing from the $200 million fund that New York Gov. Kathy Hochul (D) announced in January 2022.
The $150 million investment in the fund came about a year and a half later from Chicago Atlantic Admin, LLC adding to the state’s $50 million investment from NY’s cannabis industry revenues. However, the issuance of the social equity retail licenses was on pause for months, up until this week.
What Was The Delay?
Military veterans had sued the Office Of Cannabis Management (OCM) in August,