Inside the murky $200M effort to kickstart NY Marijuana Industry
Smoke and mirrors: Inside the murky $200M effort to kickstart NY’s marijuana industry.
New York’s equity-focused rollout of its legal marijuana market relies heavily on a $200 million fund to support the state’s first retailers.
Yet the team picked to raise and manage that money – an NBA Hall of Famer and a shoewear entrepreneur – have repeatedly failed to deliver on their biggest and boldest claims, including constructing a 180,000-square-foot cannabis “compound” in Detroit and investing in entrepreneurs of color with a $100 million fund, a NY Cannabis Insider investigation has found.
In addition, the duo have made several misleading or outright false statements about their accomplishments in the press; displayed evidence of financial mismanagement long before being selected for the job; and have apparently missed the state’s anticipated deadline of Sept. 1 for raising $150 million from private investors.
The discoveries – most of which were found through online research – call into question the state’s vetting process, as well as the future of New York’s social equity-focused cannabis marketplace.
“The individuals that are going to be hurt the most by this are in those very communities that we’re supposed to be uplifting and empowering through this process,” said Terrence Coffie, an adjunct lecturer at NYU and founder of the Social Justice Network, after being briefed on NY Cannabis Insider’s findings.
Terrence Coffie is an adjunct lecturer at NYU and founder of the Social Justice Network. (Courtesy photo)
“Without holding up the process,” he said, “there needs to come a point where we reassess where we’re at.”
How we got here
In January, Gov. Kathy Hochul announced the creation of a $200 million public-private fund which will pay for the leasing and equipping of up to 150 turnkey Conditional Adult-Use Retail Dispensaries (CAURDs). Those dispensaries will be turned over to licensees who’ve been impacted by the inequitable enforcement of marijuana laws.
Just last week, New York’s Cannabis Control Board awarded those first CAURD licenses, with the remainder expected to be announced in the coming months.
These first-round retailers will get a huge head start on the competition, but for that to happen, someone first needs to raise $150 million from private investors and manage that money. Without it, there’s only what the state has pledged toward the effort – $50 million.
In June, the Dormitory Authority of the State of New York (DASNY) picked as a fund manager Social Equity Impact Ventures, “a premier minority-led investment team,” headed by NBA Hall of Famer Chris Webber and entrepreneur Lavetta Willis, who launched a sneaker company in the late ‘90s.
DASNY President Reuben McDaniel III and NBA Hall of Famer Chris Webber at an announcement of the hiring of Social Equity Impact Ventures as NY's social equity fund manager. (Source: Siebert Williams Shank press release)
However, in the months following the announcement, questions and concerns about Impact Ventures began circulating throughout the state’s cannabis industry: Is the team raising money? Who are they talking to? What are their qualifications? What happens if they can’t find investors?
In September, through the state’s Freedom of Information Law, NY Cannabis Insider requested records detailing DASNY’s vetting and hiring process around this contract. The agency has not produced those documents as of Dec. 1.
As a result, we did our own vetting by interviewing cannabis entrepreneurs, industry experts and others across several states; by using research tools to look at financial histories; and by fact-checking public claims made by Webber and Willis.
What quickly became apparent was that most – if not all – of Webber’s and Willis’ major accomplishments in the cannabis space, touted throughout news publications, press releases and in private meetings, have never materialized: those include a $100 million fund for entrepreneurs of color, a $50 million cannabis operations and training facility in Michigan, and involvement with a cannabis degree program at Brooklyn’s Medgar Evers College.
“The ultimate goal with all of this, whether it is cannabis or NFTs … is to put myself in a position to be able to purchase a sports team.”
— Chris Webber, NY Post, June 16, 2022
Additionally, research into Willis’ personal financial history – based on publicly available records from California and Oregon – shows a pattern of noncompliance that’s alarming to experts interviewed, considering her current role raising and overseeing hundreds of millions of dollars for New York.
These findings come less than a month after NY Cannabis Insider published a different investigation that found the state had never made public Webber and Willis’ strong financial ties and potential conflicts of interest with the major global cannabis brand Cookies, including partnerships and retail deals.
Social Equity Impact Ventures did not respond to questions for this story, and DASNY has repeatedly declined to provide an update on the team’s fundraising progress.
The Webber Wild fund
The most relevant work Webber and Willis could have cited as justification for the fund management job is their role as partners in the Webber Wild Impact Fund, an alleged $100 million pot of money announced in February of 2021 that’s meant to support cannabis entrepreneurs of color.
“What we have in this market is the limitation of Black capital supporting social equity.”
–Willie JR Fleming, Illinois-licensed cultivator and community organizer
Aside from Willis’ “extensive brand building experience” and Webber’s basketball history, the fund was the only qualification referenced in the state’s June announcement about their hire.
The fund was created by Webber and Jason Wild, the president and chief investment officer of JW Asset Management and the chairman of TerrAscend, a multistate operator (Wild did not respond to an interview request).
However, NY Cannabis Insider has been unable to locate anyone in any state who has ever received money from the Webber Wild Impact Fund.
We spoke with more than 20 people for this story, including cannabis entrepreneurs of color who were involved with Webber and Willis at some point; people who work in the cannabis funding ecosystem; and industry veterans.
The majority of them would not go on the record out of concern they might jeopardize future funding opportunities.
But some did.
“I haven’t seen them do anything,” said Lanese Martin, executive director of The Hood Incubator, a national political action organization centered around cannabis justice that was actively engaged in funding conversations with Webber and Willis last year.
Lanese Martin is the executive director of The Hood Incubator, a national political action organization centered around cannabis justice. (Courtesy photo)
“I’m not even mad at the Webber Wild fund – it’s just how it works,” Martin said. “Based on their resume, we should all be shocked if a former basketball player and a retail urban streetwear entrepreneur would be able to pull this off. But we applaud them for wanting to.”
Martin and others interviewed by NY Cannabis Insider all shared similar stories: they were introduced to Webber and Willis, spent time – sometimes months – in talks, only to see the fund managers eventually disappear from the conversation.
“There was at least a period of six months where my time was actively wasted,” Martin said.
She emphasized that the problem isn’t unique to the Webber Wild fund. Instead, she said, it’s a systemic issue among cannabis investors.
“Why are people expecting traditional capitalists to all of a sudden be philanthropists?” she said. “It’s like having the fox guard the hen house. It makes no sense to me.”
Jesce Horton, who co-founded cannabis brand LOWD and the Minority Cannabis Business Association – among other organizations – said he was also in talks with the Webber Wild fund last year.
“They seemed like decent enough people,” Horton told NY Cannabis Insider.
“They started telling me about the funding they were doing, and I thought they expressed a sincere desire to fund, but after that – I stopped hearing from them.”
Jesce Horton co-founded the Oregon-based cannabis brand LOWD and the Minority Cannabis Business Association – among other organizations. (Photo: Sam Gehrke).
Horton didn’t think too much of it, he said, until someone sent him an article published in Forbes where the Webber Wild fund claimed to be investing in his company.
“That was definitely a disappointing situation,” Horton said – because it wasn’t true.
“I was told by an investment group that they decided not to pursue LOWD after that article because they assumed I was funded,” he said.
However, some see the Webber Wild fund as a better option than the alternative.
Willie JR Fleming, a Chicago-based community organizer and an Illinois-licensed cannabis cultivator, said he is in active conversations with the Webber Wild fund, but understands that “from the outside looking in, it looks fishy as hell.”
“I just felt that they were more trustworthy than the traditional MSOs,” Fleming said, referring to the large multi-state operators in the cannabis space.
Willie "J.R." Fleming, director of the Chicago Anti-Eviction Campaign and who helped organize a nonprofit called Hemp for Hoods smokes in a vacant lot next to a boarded up home on the Southside of Chicago, Thursday, Sept. 19, 2019. (AP Photo/Charles Rex Arbogast)
“They were a diverse team, you got Webber, Lavetta ... then you got TerrAscend and Jason Wild, who understands financing. I thought it was smart of them to come together and take a crack at this social equity market.”
Fleming is also the executive director of the Chicago Anti-Eviction Campaign and helped organize Hemp for Hoods, a nonprofit aimed at minority empowerment.
Regarding Webber and Willis, he asked, “Who would you rather be in that space assisting us? The MSOs, or somebody who’s more interacting with social equity folks – somebody who’s more familiar with the struggle?”
“What we have in this market,” Fleming said, “is the limitation of Black capital supporting social equity.”
However, Fleming said he hasn’t yet received any funding from the team.
Transforming Detroit
In September of 2021, Webber, Willis, and Wild announced a partnership to launch a $50 million cannabis operations and training facility called Players Only Holdings in downtown Detroit. It marked the “first major announcement from Webber and Willis” since forming the Webber Wild fund earlier that year, according to MJBizDaily.
“This will be the shining jewel of Michigan,” Webber said at the time. “Everything great in Michigan starts in Detroit.”
The project was expected to encompass nine acres and eventually become a $175 million investment in the Motor City. It would feature cultivation, a dispensary, a consumption lounge, an educational component, and create hundreds of new jobs over the next three years.
The site obtained zoning approval and pulled permits last year, according to a city spokesperson, and the first phase of construction was expected to be done by March.
On Nov. 30, 2022, NY Cannabis Insider sent a photographer to comb the streets that comprise the complex.
No construction crews were hard at work (aside from a utility company apparently laying underground cable). No buildings have been renovated. The warehouses appeared as vacant as they were when the announcement was made last year.
Reporters could find no update about the facility in the press, among PR outlets, or from the city itself.
“The city is aware of the pending project, but not certain of their intentions with it,” said Detroit spokesperson Leisa Parham.
“Based on their resume, we should all be shocked if a former basketball player and a retail urban streetwear entrepreneur would be able to pull this off. But we applaud them for wanting to.” Lanese Martin, The Hood Incubator
Webber also announced last September that the complex would host “a high-impact, hands-on educational experience” through Cookies U.
The Cookies U concept was described months earlier as a partnership between Cookies and “The WebberWildWillis Foundation” – a nonprofit serving “Black and Brown communities negatively affected by the War on Drugs,” according to Leafly.
NY Cannabis Insider could find no records about this foundation in California or Michigan; through the IRS’ tax exempt organization search; or within the corporate data repository opencorporates.com.
Cookies U launched in Humboldt County in May of 2021, and aims to recruit and provide students with a “three-month long intensive and comprehensive educational curriculum to prepare them for a sustainable career in the cannabis industry.”
Cookies co-founder and CEO Berner said about the Players Only project: “I have to salute Chris Webber, Jason Wild, and Lavetta Willis for supporting our vision to build out Cookies U in Humboldt California and extending the program to Detroit.”
NY Cannabis Insider sent Cookies questions about the facility and their relationship to Webber and Willis in late November.
A PR spokesperson for the company replied, “Unfortunately, Cookies’ schedule doesn’t allow time to answer your questions.”
“If you’re interested in learning more about Cookies’ expansion plans for NYC or visiting the Cookies SF Herald Square location, we’d be happy to coordinate after the holidays,” the spokesperson said.
Medgar Evers College
Medgar Evers College, located in Brooklyn’s Crown Heights neighborhood, became the first City University of New York campus to offer a cannabis minor degree program last summer.
At the time, Dr. Patricia Ramsey, president of Medgar Evers, said she was pleased to see her college “on the cutting edge of providing educational opportunities to learn about the many beneficial uses of plants such as cannabis.”
Nearly every resulting announcement in the press mentioned both the Webber Wild fund and Cookies as providing a supporting role in developing the program, with one article citing that the degree was “made possible” in part by Webber Wild and Cookies.
“That was incorrect – the cannabis degree program was already established prior to those conversations,” said a Medgar Evers spokesperson who wasn’t authorized to speak on the record about this issue. In fact, conversations about the cannabis program began internally in 2018, the spokesperson said.
Oddly enough, another news article said the Players Only facility in Detroit would host a free GED program in partnership with Medgar Evers College and Cookies U.
Regarding both Detroit and Brooklyn, the spokesperson said that “there were some conversations about collaborations down the road, but nothing has ever materialized.”
“I even checked with faculty and staff, and no one is aware of anything – not any internships, not any programs, fellowships, or anything.”
Cookies did not respond to questions about its involvement with Medgar Evers.
Tax problems
As part of NY Cannabis Insider’s investigation into Webber and Willis, reporters conducted a financial background check using LexisNexis (a tool for computer-assisted legal research), then fact-checked those results against publicly available records in two states.
In Willis’ case, documents show she failed to pay state or federal taxes on at least seven occasions from 2006 to 2016, resulting in more than $110,000 in judgements and liens filed against her in California and Oregon.
Though Willis eventually paid the taxes and was released from the liens, the pattern does not bode well for someone overseeing $200 million in funds, according to experts.
“What the public record indicates is that she appears to have had a pattern of not fully paying taxes at both state and federal levels over the span of many years, and that is a little bit concerning,” said Ben Rattner, counsel at Cermele & Wood who serves on the regulatory committee of the Hudson Valley Cannabis Industry Association.
“In fairness to her, some of these tax issues are long ago, but there are a lot of former tax liens,” Rattner said.
Fans wave a sign at Sacramento Kings' Chris Webber during their game against the Detroit Pistons in Auburn Hills, Mich., Wednesday, April 3, 2002. Webber was glad to be home but was in no hurry to discuss allegations that he accepted thousands of dollars from a booster while playing at Michigan. (AP Photo/Paul Sancya)
Additionally, Webber was indicted 20 years ago for lying to a grand jury about a financial arrangement with a University of Michigan booster, which involved money laundering. Webber eventually pleaded guilty to a reduced charge of criminal contempt and admitted to having received and repaid $38,200 in the scheme.
To be fair, the scheme occurred in the early ‘90s, when Webber was in college.
Laying it out to DASNY
NY Cannabis Insider summarized its findings to DASNY in mid-November and asked the agency to provide its justification for hiring Webber and Willis in the face of everything uncovered.
In response, DASNY said that it reviewed the qualifications of all companies and individuals that applied to manage the fund, per state law, and that several evaluating factors went into awarding the management contract.
Those included how long ago any incidents identified may have happened and whether those incidents have any bearing on the work being done.
No information was disclosed or discovered during the review process that adversely impacted the selection of Social Equity Impact Ventures under state procurement requirements, DASNY said.
Regarding Webber and Willis’ potential conflicts of interest with Cookies, DASNY added that the team has “no relationship to the Cookies store in NY,” and that their only connection with Cookies “is with Cookies U, which provides training to underrepresented individuals in the cannabis space.”
That second statement is false.
Webber and Willis, through Players Only, announced in August that Cookies retail dispensaries in Michigan would sell the duo’s “exotic cannabis flower strains, all-natural cannabis oil cartridges, pre-rolls, vapes,” and clothing.
That same announcement said Players Only has forged “strategic partnerships” and “minority ownership positions” in certain limited licensed states to “provide the brand with optimum marketing and distribution opportunities.”
At the end of NY Cannabis Insider’s exchange with DASNY, reporters asked once again whether the government agency would disclose how much of the $150 million the Hall of Famer and the shoewear entrepreneur have raised to date for the state’s first-round dispensary program.
Once again, the agency said it would not provide that information.
