After a year of anticipation and delays, the state announced Friday that fundraisers secured an investor for a social equity fund that will help cannabis entrepreneurs launch recreational pot shops.
Chicago Atlantic Admin LLC, which operates a publicly traded real estate investment trust focused on cannabis companies, will put up to $150 million into the fund over three years, according to Jeffrey Gordon, a spokesman for the Dormitory Authority of the State of New York, the agency overseeing the endeavor. Exactly how much Chicago Atlantic Admin invests will “depend on the number of dispensaries and the construction needs for each location,” Gordon said.
Gov. Kathy Hochul previously announced the state would put $50 million into the New York State Cannabis Social Equity Investment Fund. The $200 million is expected to help about 150 of the first recreational dispensary licensees secure storefronts, setup dispensaries and finance ventures. The fund may be the only financing option for some state licensees since few banks and credit unions will open bank accounts — let alone make loans — to cannabis companies.
The money is meant to help the initial licensees — business owners who have or are related to someone who has a cannabis record — get established, Hochul said. Black and Latino New Yorkers were arrested for marijuana offenses at higher rates than white residents before the drug was legalized.
“Today’s announcement reinforces New York’s commitment to building partnerships that benefit New Yorkers and setting right the wrongs of the past,” Hochul said in a statement.
The initiative has been slow to take shape. DASNY announced in June 2022 that it contracted a financial team — including former NBA star Chris Webber and former New York City Comptroller William Thompson — to secure up to $150 million in commitments for the fund by September, according to DASNY’s request for proposals.
Licensees with their own locations may fund the buildout and design with loans of up to $100,000 that come with an anticipated interest rate of 5%, DASNY said. Alternatively the fund will spend up to $1.3 million finding and furnishing each dispensary, which will then be subleased to a licensee. Under this arrangement, the startup costs will be paid back over a decade at a 13% interest rate, Gordon said.
One licensee, Osbert Orduña, said a third option — say a $500,000 loan with a 7% interest rate — would be welcome. A mid-size loan could also help the fund stretch the $200 million and assist more licensees, said Orduña, a Suffolk resident authorized to open a dispensary in Queens.
Orduña said he’s “very optimistic” that the fund will now “start to move quicker with securing real estate and expediting the build-out of the spaces because, up until now, the rollout has been abysmally slow.”
So far, five dispensaries across the state have held temporary, pop-up-style openings with support from the fund. More traditional dispensary launches are expected this summer, Gordon said.
The bulk of businesses licensed to open dispensaries on Long Island are struggling to get off the ground because of restrictive zoning, not funding hurdles, according to Hugosbely Rivas Jr., who helped start the Long Island Cannabis Coalition trade group.
“It’s going to give more opportunity — for the people that don’t have the financial means — … to get open sooner rather than later,” Rivas said.
Sarina Trangle covers affordability and cost of living issues and other business topics. She previously worked as an editor and reporter at amNewYork.
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