Equity applicants in New York will soon have access to a $200 million public-private fund as they build out state-legal cannabis businesses. But who will bank the New York Social Equity Cannabis Investment Fund?
The answer could come as soon as next month. The Dormitory Authority of the State of New York (DASNY) posted a Request for Proposals on September 16 with a deadline of 3 p.m. on October 7. This RFP follows a Request for Information published in July.
The $200 million fund for which DASNY has opened this RFP aims to support a specific set of licensees. In March, the state’s Cannabis Control Board, which is housed within the Office of Cannabis Management, voted in favor of a measure to allow New Yorkers who have a cannabis-related conviction – or an immediate family member, like a parent, spouse, or dependent with one – and business experience to apply for a conditional adult use retail license before others are allowed to do so. That application window closes on Sept. 26, and the fund will provide up to 150 license awardees with turnkey cannabis shops.
“The goal of the State,” the RFP notes, “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.”
DASNY’s “goal” with the RFP “is to establish a contract with one financial institution capable of providing the necessary basic banking services as well as maximizing earnings on excess balances and idle cash.” The cash will “primarily” come from the “social equity licensees” repaying the fund for the storefronts. And, DASNY might also open an account “in connection with the construction management services” related to “the build out of the dispensaries.”
It is looking for an entity that has experience with “standard commercial banking services,” including things like transferring and disbursing checks and electronic transfers and general account monitoring.
When it comes to proving relevant experience, a chicken or egg situation could emerge for some applicants. With cannabis remaining federally illegal, many financial institutions have been reluctant to bank the cannabis industry.
Applicants are asked to describe their “experience with cannabis banking in NYS or other approved markets,” and to “indicate whether the experience is with medical or adult-use cannabis markets.” Applicants are also asked to provide copies of all audits related to the applicant’s financial institution’s Bank Secrecy Act/AntiMoney Laundering (BSA/AML) compliance program for the last seven years, “or as many years as your financial institution has been providing cannabis related banking services.”
After the October 7 deadline, virtual interviews are expected to take place on October 18, with an announcement about the award coming as soon as the following day.