New York Governor Kathy Hochul last week announced that the state’s cannabis social equity fund has secured a $150 million investment to support entrepreneurs licensed to open recreational marijuana retail shops. Under the terms of the deal, Chicago Atlantic Admin, LLC will invest up to $150 million in secured capital to provide loans to business owners negatively impacted by years of cannabis prohibition.
“New York has always strived to lead the nation in providing opportunities for those who have been unjustly denied privileges and opportunities,” Hochul said in a statement from the governor’s office. “Today’s announcement reinforces New York’s commitment to building partnerships that benefit New Yorkers and setting right the wrongs of the past. I welcome Chicago Atlantic’s participation in this program and applaud their recognition of the value that New York’s cannabis program will provide to so many.”
Fund Created Last Year
Last year, Hochul included the creation of the New York State Cannabis Social Equity Investment Fund in the state budget for the 2023 fiscal year. The provisions of the public-private partnership set a goal of $200 million, including $50 million from state cannabis taxes and $150 million in outside investments. The investments are designed to fill a gap in investment funding available for cannabis businesses, which face difficulty securing capital because of the continued illegality of cannabis at the federal level.
The fund will be used to support individuals impacted by the inequitable enforcement of cannabis laws who have received Conditional Adult Use Cannabis Dispensary (CAURD) licenses from the New York State Office of Cannabis Management (OCM) and the Cannabis Control Board. Under the state’s cannabis regulations, at least 300 of the state’s first CAURD licenses have been reserved for justice-involved entrepreneurs.
Chicago Atlantic manages a diversified portfolio of credit investments in the cannabis industry and has deployed over $1.8 billion across more than 50 investments. The company’s flagship investment vehicle, Chicago Atlantic Real Estate Finance, is a mortgage real estate investment trust that offers secured loans to state-licensed cannabis operators.
“Thank you to Chicago Atlantic for investing in New York’s first adult-use retail licensees,” New York State Office of Cannabis Management executive director Chris Alexander said. “This infusion of capital will provide necessary support to licensees and will help New York further its work of establishing an inclusive cannabis market that creates opportunities for entrepreneurs harmed by prohibition and locked out of markets in other states.”
Loans For New Pot Shops
New York’s cannabis social equity fund will help those who have a CAURD license meet the costs of establishing recreational marijuana retail dispensaries, including the identification and leasing of suitable retail locations and the design, construction, and furnishing of the spaces. The Social Equity Servicing Corporation (SESC), a subsidiary of the Dormitory Authority of the State of New York (DASNY), is executing the work to develop dispensaries as an agent for the Cannabis Social Equity Investment Fund.
Last year, DASNY put out a request for proposals for a team to manage the cannabis social equity fund and raise the additional $150 million through private investments. In June 2022, the agency announced that it awarded the contract to Social Equity Impact Ventures, a joint partnership between Webber Willis Ventures LLC, a company headed by NBA Hall of Famer Chris Webber and his business partner Lavetta Willis, and a firm affiliated with Siebert Williams Shank.
“We are honored by Chicago Atlantic’s recognition of the Fund’s role in fostering social equity within the NYS cannabis industry. With our dedicated partners, we are committed to breaking down barriers and creating a more inclusive landscape,” said Webber. “This transformative collaboration marks a significant milestone in our collective journey towards a future where every individual has equal access to opportunity and funding therefore empowering communities and driving positive change.”
While the goals of New York’s cannabis social equity program have been lauded as a way to ensure participation in the legal recreational market by those who have borne the brunt of decades of prohibition and disparate enforcement, critics have derided the slow pace of dispensary openings. The first adult-use cannabis retailer opened its doors in the final days of 2022. But since then, less than a dozen shops have opened statewide, according to information from the OCM.