How The Cannabis NYC Loan Fund Could Change Everything For Equitable Small Businesses

There’s a new glimmer of hope on the horizon for small cannabis businesses owned and operated by social and economic equity license holders in New York City.

On July 17, New York City Economic Development Corporation (NYCEDC) released a request for proposal (RFP) seeking a fund administrator and other private lenders to launch the Cannabis NYC Loan Fund.

Developed in partnership with the NYC Department of Small Business Services (SBS), the fund aims to promote the development of an equitable cannabis industry in the Big Apple by providing flexible capital at below-market rates to cannabis businesses owned and operated by social and economic equity applicants who have been awarded licenses to operate in New York City.

NYCEDC is targeting a total fund size between $20-30 million—inclusive of its own $8 million contribution—with additional funds coming from private lenders. The ultimate fund size will depend on private lenders’ responses to the RFP.

“The Cannabis NYC Loan Fund is an important tool for both advancing an emerging industry while also righting the wrongs of previous, discriminatory cannabis policy,” NYCEDC President and CEO Andrew Kimball tells Forbes in an email. “By making the cannabis industry more equitable through low-cost financing and partnering with the private sector, New Yorkers who have been historically disadvantaged by the industry can help herald the business of cannabis into a new era.”

New York State Office of Cannabis Management (OCM) and the New York State Department of Taxation and Finance (DTF) identified dozens more illegal shops recently in New York City and a few other cities. Last December, Mayor Adams took action with a crackdown against the glut of illegal shops popping up, which also impacts small businesses.

“Legalizing cannabis brought great promise of progress towards social and economic equity, but we cannot sit on our hands while illegal smoke shops crowd out the New Yorkers and communities who were disproportionately harmed by the ‘War on Drugs’—now that they have an opportunity for justice,” said New York City Mayor Eric Adams. “The Cannabis NYC Loan Fund will help repair past harms by creating new opportunities and growing our city’s economy. With this new tool, our city’s budding industry is on a path towards equity, sustainability, and shared prosperity for all New Yorkers, particularly those most directly impacted by the decades of prohibition.”

In April 2022, Mayor Adams pledged to promote a more equitable cannabis economy in steps. He proposed a $4.8 million investment in the Fiscal Year 2023 executive budget to promote the growth of the industry.

Last August, Mayor Adams and SBS launched Cannabis NYC, a first-of-its-kind initiative and developing interagency hub of citywide resources and services for New Yorkers looking to participate in the legal cannabis market. Loans provided through the fund will support borrower’s start-up and ongoing operating expenses and will be coupled with technical assistance, to increase the likelihood of borrower success.

Social Equity Businesses Face an Uphill Battle

Fewer than a quarter of cannabis operators in the U.S. said they are profitable in a recent survey from Whitney Economics. On top of this, in New York City, they must compete with illicit shops.

“I am thrilled to partner with EDC to launch the Cannabis NYC Loan Fund,” Founding Director of Cannabis NYC Dasheeda Dawson said in the announcement. “Our efforts here address one of the biggest barriers to success facing cannabis entrepreneurs by providing access to much needed financing that has been sorely lacking. I’m also incredibly proud of our city for establishing this Loan Fund in record time, less than a year from the launch of the Cannabis NYC initiative.”

“To create a more equitable economy, we need to make investments that help achieve this important goal for every industry we are growing in the city,” said Deputy Mayor for Housing, Economic Development and Workforce Maria Torres-Springer. “With the Cannabis NYC Loan Fund, that is exactly what the City of New York is doing, and we are excited to partner with others who want to join us in investing in an equitable cannabis industry that creates jobs, grows businesses, and creates greater prosperity in the process.”

The RFP opened on July 17 and will remain open through Sept. 7. NYCEDC will be hosting an in-person and virtual info session for interested lenders and fund administrators on August 3.