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A tale of two New York cannabis industry narratives
Gov. Kathy Hochul held a news conference on Tuesday trumpeting the number of unlicensed cannabis shops shuttered since she signed enforcement legislation in her budget this spring. State agencies have closed 114 stores, and adding cities like NYC brings the rough number to more than 500.
Hochul stood flanked between two posters, one that noted the number of shops shut down, and the other highlighting how much higher legal cannabis sales are in areas where enforcement is underway. During the first week of May to the first week in June, she said, legal cannabis sales jumped 27%.
“Let me break that down for you. For 24 stores in the enforcement areas, that means over $1 million in additional revenue, or $35,000 per store in just one month. That makes the difference between staying open and closing,” Hochul said.
“That means you continue paying good wages to your workers. It means that your supply coming up from the farmers can have a resource, a place to sell it.”
Meanwhile, also on Tuesday, outside Hochul’s Manhattan office: Drug Policy Alliance organized a demonstration during which advocates pushed back against the focus on the turbulence of New York’s cannabis rollout. This narrative is taking the eye off the ball, they said — equity and justice.
The Marihuana Regulation and Taxation Act’s “vision of a just and equitable cannabis industry is being undermined by a coordinated campaign financed by well-funded lobbyists and large corporations – fueled by large” part by large multistate operators who see opportunities for money and power, DPA wrote in an email to stakeholders ahead of the demonstration.
The city’s equity fund has an investment manager: Tuatara Capital.
This week, the New York City Economic Development Corporation (NYCEDC) and the Department of Small Business Services (SBS) announced that Tuatara Capital would head up and raise capital for the Cannabis NYC Loan Fund.
Details:
• The city has committed $9.4 million of subordinated capital to the fund at 0% interest.
• Tuatara will fundraise and might also invest their own funds.
“We are targeting the total fund size to be $20 to $30 million, but have developed a phased approach, so there will be some capital available sooner,” said Brinda Ganguly, executive vice president of Strategic Investments Group for the EDC.
The first phase will involve an initial $2 million tranche for pre-revenue cannabis businesses, “specifically CAURD licensees entirely funded by city capital,” Ganguly said.
The city received 7 applications for the fund administrator RFP. And for the administrator and capital partner “jointly,” the city received 2 applications, Ganguly told reporters in response to Cannabis Wire’s question.
It appears that the rescheduling process has “shifted the tide” for cannabis fundraising, Cannabis NYC Founding Director Dasheeda Dawson said in response to a question from Cannabis Wire.
Rescheduling conversations have “shifted the tide from a feeling of shrinking capital markets related to cannabis, to the potential of actually increasing because there are potentially bigger players and bigger money that will be put into cannabis.”
The application portal is expected to open later this summer.
