As state regulators gear up to launch what will be one of the country’s biggest legal cannabis markets, New York Gov. Kathy Hochul put equity in the spotlight with a new $200 million fund.
In her State of the State speech on Wednesday, Hochul outlined sweeping budget priorities from climate action to education. While neither cannabis or hemp came up during Hochul’s speech, Hochul included in her far-reaching budget plan a $200 million public-private equity fund to “promote equity and economic justice in New York’s cannabis industry.”
The seed money will come from licensing fees and tax revenue, according to the State of the State book, and the fund will also “leverage significant private investment.” While estimates vary, New York’s cannabis industry is expected to top $4 billion.
Access to capital is a major hurdle for many cannabis industry hopefuls, especially those who seek to qualify as equity applicants. The state defines equity applicants a bit differently than other states by including distressed farmers and women and veteran-owned businesses, for example, along with applicants that come from communities affected by disproportionate enforcement of cannabis laws. When New York lawmakers legalized cannabis for adult use last year, they set a “goal” to award 50% of licenses to equity applicants.
Hochul is “focused on providing more than basic business supports and training for our future cannabis entrepreneurs, and this fund will provide direct capital and startup financing to social equity applicants,” the State of the State book notes, as the state “takes meaningful steps to ensuring that New York’s cannabis industry is the most diverse and inclusive in the nation.”
As Assembly Majority Leader Crystal Peoples-Stokes and Senator Liz Krueger pushed cannabis legalization through legislative logjams and locked horns with former Gov. Andrew Cuomo, they were unwavering on the importance of equity in New York’s cannabis industry from day one.
“We’re going to legalize marijuana and take all the revenues and dump it into the state budget and do what we’ve always been doing? I’m not going to be supportive of that,” Peoples-Stokes told Cannabis Wire in January 2021, before lawmakers and Cuomo agreed on a legalization plan, emphasizing that funds need to flow back to the communities that were most harmed. “That’s something the governor needs to come to the table and negotiate because that has to be there, period,” she said.
Peoples-Stokes specifically stressed the need for equity-related language to be included in the foundation of the bill “because there could be a new governor in four years, so you don’t want to put something in place, hoping that the current governor is going to be fair to legacy communities, and then there’s another governor and it goes away.” Months after Cuomo signed the legalization bill, he resigned amid growing sexual harassment-related scandals.
Once Hochul took office, New York’s cannabis regulators were named and began to meet regularly to craft new cannabis. So far, those rules have focused on medical cannabis and hemp. Localities had until December 31 to decide whether to allow either adult use cannabis sales or consumption spaces. As of January 5, 692 of 1,520 local jurisdictions had decided against sales, while 790 opted out of lounges, according to the Rockefeller Institute of Government’s Marijuana Opt-Out Tracker.
Hochul also announced through the State of the State book that the Department of Agriculture and Markets will create a grain and fiber working group to “coordinate the activities of state, federal, and industry partners on workforce development and training needs, sampling and testing, and research and market opportunities.”
The document noted that this was a move to “bolster the increased interest in the use of hemp for grain and fiber applications.” New York’s hemp industry has taken a beating over the past two years, as Cannabis Wire has reported, as excitement outpaced regulations and a glut of product took hold. The governor’s administration is also specifically supporting Cornell University’s work as they develop new processing techniques and commercial hemp cultivars for grain, fiber, and cannabidiol.
The governor’s administration noted in the State of the State book that “while New York has committed to making its cannabis industry more equitable, this action will put that commitment into practice. New York will lead where many other states have fallen short.”
