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NY Senators use Dormitory Authority hearing to seek answers on troubled equity fund.
On Tuesday, a hearing for Gov. Kathy Hochul’s nominee to head the state’s Dormitory Authority devolved into a conversation almost entirely about cannabis. And, specifically, about the fate of the state’s Social Equity Investment Fund.
First, some background: In early 2022, Hochul announced that the Dormitory Authority of the State of New York (DASNY) would lead a first-in-the-nation public-private fund that would put $200 million toward turnkey cannabis shops for the “justice involved” licensees in the Conditional Adult Use Retail Dispensary (CAURD) program. While $50 million was seeded by the state, the remaining $150 million remained up in the air for more than a year. In June 2023, Hochul announced a “commitment” from Chicago Atlantic, an investment firm focused on cannabis real estate. By then, only 24 deals were signed with CAURD licensees, who were loudly decrying this crawling pace. In September, the head of DASNY, Reuben McDaniel, unexpectedly resigned.
(McDaniel, pictured above in July 2023, spoke during the opening of Statis, a “bring your own location” in the Bronx, in July 2023.)
So, what was the point of Tuesday’s meeting, and who brought up cannabis? The Senate Finance Committee held a joint hearing with the Committee on Corporations, Authorities, and Commissions to consider Hochul’s nomination of Robert Rodriguez to become the next president and CEO of DASNY. Rodriguez has served as acting president and CEO since April.
Sens. Gustavo Rivera and Liz Krueger asked most of the cannabis questions. Krueger is the co-author of the state’s adult use cannabis law.
What did they learn? First, there are still only 24 deals between DASNY and CAURD licenses.
“Of 150 stores, we haven’t gotten very far,” Krueger said, referring to the state’s early goal of opening 150 turnkey shops. “I think probably all of you have met with CAURD holders who got caught this system, and have heard, in my opinion, some of the most disturbing things I ever imagined coming out of a government-operated program.”
Krueger asked how much of the $50 million the state committed has been spent. About $36 million, Rodriguez said.
Where does Chicago Atlantic fit into all of this? Rivera referenced concerns that emerged among CAURDs in 2023 about the implications of Chicago Atlantic entering the picture, considering Chicago Atlantic has investments in some major cannabis players who could be eyeing New York. He asked about the role that DASNY will play with loans going forward.
“I would much rather trust in the state agency than a private entity, particularly a private entity that has economic interests that might benefit from approving certain things or not approving certain things,” Rivera said.
Rodriguez responded, “That’s why we did not completely turn over that entire process to the private market. And I think that’s the role that DASNY plays in terms of making sure that the state portion of that investment meets the social and policy goals that were intended in the legislation.”
But, there was confusion about important changes afoot. “We had been advised that there would be no continuing arrangements with this company on any new deals at this time. I’m hearing as of last night, maybe that wasn’t true,” Krueger said, alluding to conversations happening behind the scenes about Chicago Atlantic’s role.
“But, I’m also just hearing, as of today and last night, there may be some new model involving purchasing as opposed to the lease agreements,” Krueger continued. “So I’m also very concerned about that, unless we can come up with all these answers. And frankly, with all due respect, the last head of DASNY fled the state over this issue. Not just fled the agency, he fled the State of New York over this. I don’t wish us to continue a very, very questionable model that I don’t believe is in the best interest of the CAURD applicants or the state of New York.”
Rodriguez confirmed that Chicago Atlantic will purchase sites going forward during a muddled exchange on the topic with Krueger. Rodriguez didn’t have answers to several of Krueger’s questions, including what the penalties might be for CAURD licensees who miss a payment and whether the state would be on the hook for defaulted loans.
“It’s in no one’s interest to see people default. It’s not in the state’s interest and it’s not in the mission of what we’re trying to accomplish in terms of the social equity fund,” Rodriguez said. “That’s the reason why the fund partner, who has experience running and operating cannabis stores, should be bridging that gap. And to the extent that they’re not, then that’s something that can be improved.”
So, is DASNY’s role changing going forward? Cannabis Wire asked DASNY for clarification about its current role with cannabis in New York, and DASNY spokesperson Jeffrey Gordon responded that “the social equity investment fund will transition from the lease portion of the program to the purchase element.”
“DASNY subsidiary [Social Equity Servicing Corporation] will remain agent to the Fund and is anticipated to service loans and leases,” Gordon continued.
Cannabis Wire asked a number of follow-up questions, including whether DASNY itself will execute any additional leases. DASNY has not yet responded.
What else came up during the hearing? Sen. Michelle Hinchey, chair of the Senate Agriculture Committee, pointed out that on May 10, Hochul announced a $5 million in grant support to support CAURD licensees. Hinchey said that she was happy to see CAURD licensees get help, but she asked for support for growers.
“On the farm side, we’ve been fighting for the same thing. We’ve been met, from the governor’s side, with absolutely complete resistance and zero interest on helping our farmers. So I look forward to seeing the answers to some of these questions,” Hinchey said. “Because, especially hearing what we’ve heard from the real estate side, disheartening is not even enough to cover it.”
NYS rolls out more enforcement resources while NYC closes a few more unlicensed shops.
The state now has a page dedicated just to enforcement. It’s a centralized spot with links tailored for New Yorkers, landlords, localities, and members of law enforcement.
The page also starts to lift the hood on areas of enforcement, like Gov. Hochul’s task force, noting that more than a dozen stakeholders “will be engaged” in efforts to shut down unlicensed shops.
![](https://ci3.googleusercontent.com/meips/ADKq_NaR4Malk3P8oRtbd2HuTZ0lPBi4uteQJmCmg4rpI1uvkM4HtZAfOcPW6jQ4aGPXeXpyCFRpj3N521oc1fPw1OrTBgs0_3HE1pFjVfsq6fyGhN2g_W-VkS1jNzdl-CEfl6ASaew0E4zjTAFESb_uDV4muqibEh4qe9I=s0-d-e1-ft#https://mcusercontent.com/54cd15fa69101eaf2e8f1cf3a/images/f1ab1b56-3901-b772-a118-a37f0adc3f37.png)
In addition to shutting down unlicensed sellers, the task force is focused on “capturing lost revenue and ensuring illicit operators and the landlords who lease to them are held accountable for the negative impacts of their violation of State law.”
Meanwhile, in NYC: The mayor’s office told Cannabis Wire that 135 unlicensed shops (up from 75 last week) have now been “sealed.”
Connecticut AG isn’t done with Eventbrite.
Last week, AG William Tong announced that his office reached a “stipulated judgment” with the organizers of HighBazaar. The organizers must now “make clear and conspicuous disclosures at HighBazaar events and on any advertisements that the sale, distribution or exchange of cannabis will be strictly prohibited.” A $20,000 fine will be suspended if they follow all of the rules.
Tong also previously sent Eventbrite a notice, as HighBazaar used the platform to advertise its events.
“The letter warned that such posts violate EventBrite’s own Community Guidelines and that the events they promoted also violate Connecticut law,” Tong announced. “The Office of the Attorney General has an active and ongoing investigation into EventBrite’s continued marketing of unlicensed cannabis markets in Connecticut.”
Cannabis Wire reached out to Eventbrite for comment. Here’s what they previously told Cannabis Wire:
“Eventbrite’s Community Guidelines clearly state that we do not allow events that include the use or sale of cannabis. This policy applies regardless of cannabis’ legality in a jurisdiction. Our community plays an essential role in helping to flag any concerning content … We review each report we receive and take swift action when necessary.”