New York is taking an unprecedented path in its effort to meet a high bar for equity as the state launches its adult use cannabis program.
The Dormitory Authority of the State of New York has released a Request for Information to learn more about who might help the state bank the $200 million cannabis equity fund announced in Gov. Kathy Hochul’s budget in January.
DASNY is seeking information about “financial institutions with proven experience in providing custodial and general account services, including establishing and administering all accounts and maintaining accurate records of activity in each account. Each account may receive regular deposits of [Automated Clearing House], wire or checks primarily from retail cannabis dispensary operators for the payment of their lease and loan obligations,” according to the notice.
DASNY, which is acting as a leasing agent and loan servicer, “collecting lease and loan payments from the Dispensary Operators on behalf of the Fund,” is moving quickly. The deadline is July 11, and interviews are scheduled to be conducted no later than August 1.
The Fund will allocate financing for the construction and leasing of spaces for Social Equity Licensees.
“Social Equity Licensees, unless provided access to capital, would generally lack the means to take on the significant initial fixed capital costs associated with the build, equipping, and leasing of their Dispensaries,” the RFI reads, adding that one of the state’s goals of legalization is to “provide social equity and restorative justice for the benefit of communities and persons that have been disproportionately impacted by the enforcement of past laws punishing the use of cannabis.”
“This goal is advanced through the provision of financing and other related services to Social Equity Licensees that will enable them to establish their Dispensaries,” the notice continues.
When lawmakers passed the Marihuana Regulation & Taxation Act (MRTA) in March 2021, they pushed former Gov. Andrew Cuomo hard on equity provisions. MRTA co-author Assembly Majority Leader Crystal Peoples-Stokes said that if equity wasn’t clearly laid out in legislative language, it wasn’t guaranteed, because “at the end of the day, things don’t shake out being well-intended for Black people in New York or in America,” Peoples-Stokes told Cannabis Wire last January.
MRTA set the ambitious goal of allocating 50% of licenses to equity applicants. To support some of these applicants, Hochul announced in January in her budget a first-of-its-kind cannabis equity plan: a $200 million public-private fund to “promote equity and economic justice in New York’s cannabis industry.”
In March, the state’s cannabis regulators added to this plan by voting to allow people 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, as Cannabis Wire reported. The $200 million fund aims to support these license awardees.
And, DASNY announced last month that it selected Social Equity Impact Ventures, LLC to manage the fund.
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.
The search for a banking solution is the next step in this months-long process as regulators aim to get the first adult use sales off the ground by the end of 2022.
Banking remains one of the biggest headaches for the cannabis industry, as the ongoing hurdles related to federal cannabis prohibition has made many financial institutions and services inaccessible.
Reuben McDaniel, the president and CEO of DASNY, and member of the state’s Cannabis Control Board, spoke during the June announcement about DASNY’s selection of Social Equity Impact Ventures, LLC.
The fund will, McDaniel said, “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.”
