The specifics of New York’s equity plans are coming into focus.
The Dormitory Authority of the State of New York announced on Wednesday that it selected Social Equity Impact Ventures, LLC to manage its $200 million New York Cannabis Social Equity Investment Fund.
“Today, New York takes an important step forward in creating jobs and opportunity for those who, historically, have been disproportionately targeted for cannabis infractions,” Governor Kathy Hochul, who on Wednesday also announced the members of the newly formed Cannabis Advisory Board, said in a statement. “As we create a new industry in New York, I am proud to see real progress in addressing the economic needs of our future entrepreneurs.”
The LLC is a joint venture between an entity run by former NBA player Chris Webber and Lavetta Willis, with whom he created Players Only Holdings, a “$50 million-dollar cannabis operations and training facility” in Detroit, and another entity run by Suzanne Shank, the president, CEO, and founder of investment firm Siebert Williams Shank, and Bill Thompson, a partner at the firm and the former Comptroller of New York City.
“Other states have struggled with implementing” equity, Reuben McDaniel, the president and CEO of DASNY, and member of the state’s Cannabis Control Board, said at DASNY’s Manhattan office on Wednesday, where the fund managers were announced. The fund was created, he continued, to “help those minority entrepreneurs get facilities identified, leased out, and doled out, so when they get their licenses they can move right in. And one of the big obstacles, access to capital and leases, will be eliminated by this fund.”
In addition to McDaniel and the selected managers, several other stakeholders spoke or were in attendance, including Tremaine Wright, chair of the state’s Cannabis Control Board (CCB), and Assembly Majority Leader Crystal Peoples-Stokes, who co-authored the state’s adult use law. So, too, was Bill Underwood, a senior fellow at The Sentencing Project, who was released from prison last year after serving for three decades.
“We have worked with social equity applicants and advocates all around the country and we’ve been able to see some of the pitfalls, some of the barriers,” Webber said. “And in speaking with everyone here, it’s been amazing that a lot of it has been addressed just through your thoughtfulness, your empathy, and your sympathy.”
Gov. Kathy Hochul included this public-private fund in her budget in January to “promote equity and economic justice in New York’s cannabis industry.” In March, the state’s cannabis regulators approved a proposal to allow individuals who have a record of cannabis conviction, or have a parent or guardian with one, to apply for conditional dispensary licenses before other entities are allowed to do so. The fund aims to support these license awardees, as it would, according to the RFP, “finance the leasing and equipping of adult use retail cannabis dispensaries in New York state to be operated by social equity licensees.”
The state expects roughly 150 such shops. The application window has not yet opened for these conditional licenses. However, the state has awarded nearly 150 conditional cultivator licenses.
While no specific timeline was discussed, at the very end of the event McDaniel shouted out CBRE Group, or Coldwell Banker Richard Ellis, a real estate company working with the fund, and said he expects “ribbon cuttings” to happen “sometime August, September.”
The managers must now, according to the RFP, “make, or to raise from one or more private investors, a seed money investment in the Fund,” and DASNY itself “anticipates making a seed money investment in the Fund at such time that would provide sufficient capital to the Fund for the build-out and equipping of up to 5 Dispensaries before the Fund has initiated its first general capital call to all limited partners.”
By September 1, the managers are expected to raise up to $150 million, while DASNY will put in $50 million. And while it will be “privately managed and controlled,” the Fund will “establish a public policy committee” made up of the Cannabis Control Board chair, the Office of Cannabis Management executive director, and the DASNY president. This committee will have a wide-ranging role, from identifying investors to the leasing and construction of dispensary sites.
“This is that opportunity for Black and brown people to get access to generational wealth,” said Peoples-Stokes on Wednesday.
“Now, do I think that’s easy? No, I don’t think that’s easy, because, by the way, the multistate operators are in my office all the time,” she continued, referencing bigger cannabis industry players with larger footprints in other legal states. “They come from all over the country. Some of them even come from Canada. And I hear their passion, I hear what they’d like to see happen. And I’m not going to hold it against them, but I have to keep telling them: you’re not the priority here. Not that you can’t be engaged. You can. But there is a priority first.”
At the May CCB meeting, as Cannabis Wire reported, McDaniel provided an update with regard to another, related RFP. It seeks design-build firms to “provide design, construction, and other services needed to renovate existing spaces for conditional adult-use cannabis retail dispensary facilities to be operated by social equity licensees.”
“Our goal is to get between 8 to 10 design build firms throughout the state of New York,” McDaniel said, adding that the Authority is looking for “things like experience building retail cannabis locations in other places around the country.”
Similar efforts are underway in New York City to provide assistance to equity operators. The New York City Economic Development Corporation, for example, put out a Request for Expression of Interest (RFEI) “to engage public resources and collaborate in promoting the development of an equitable cannabis industry in New York City.”
And Mayor Eric Adams put nearly $5 million in his budget toward cannabis equity efforts, as Cannabis Wire reported. The funding will be used for “outreach” by the New York City Department of Small Business Services (SBS), the New York City Economic Development Corporation (EDC), and the Mayor’s Office of Criminal Justice (MOCJ), among others, in an effort to “begin identifying stakeholders in impacted communities, launching a public education tour to educate people about the new process, promoting an educational media campaign, and assessing the needs of interested parties so they can better tailor their services and programs to assist those interested in participating in the industry.”