New York’s political leaders silent about state’s failure to raise cannabis funds
New York’s political leaders will not speak about the state’s failure to raise $150 million for the equity-focused portion of its legal marijuana market rollout, even though those same leaders were front and center in calling for a socially just cannabis industry.
Gov. Kathy Hochul has announced every milestone in the state’s legalization efforts, but wouldn’t respond to questions about what happens now that the Dormitory Authority of the State of New York (DASNY) has admitted that – despite eight months of effort – its fund managers haven’t raised a dollar for the Social Equity Cannabis Investment Fund.
Reuben McDaniel, the CEO of DASNY and one of five members of the state’s Cannabis Control Board, told a reporter late last month that despite a “great investor base,” the agency hasn’t had its “final close yet.”
A DASNY spokesperson confirmed that statement to NY Cannabis Insider again last week.
Gov. Hochul charged DASNY nearly a year ago with finding a fund manager to raise $150 million from private investors. That money, combined with $50 million pledged by the state, will go toward finding, securing and retrofitting locations for the Conditional Adult-Use Retail Dispensary (CAURD) program.
The $200 million in total is supposed to pay for the build outs and loans to roughly 150 CAURD licensees, who are all “justice-involved individuals.”
The Office of Cannabis Management has awarded 66 CAURD licenses since November – 10 to nonprofits and the rest to individuals. To date, only one DASNY dispensary, Smacked Village in Manhattan, has opened.
The other three licensed stores – two in Manhattan and one in Binghamton – are run by nonprofits, which are not eligible for the DASNY loans or locations.
A DASNY spokesperson told NY Cannabis Insider that the agency remains “optimistic that the fund, which continues its capital-raising efforts, will be successful as New York State continues to build a groundbreaking cannabis retail program grounded in equity.”
Jayson Tantalo and his wife Britni co-own Flower City Dispensary, and are among the hundreds of CAURD applicants waiting to hear whether they were picked for the program.
The pair have invested more than $12,000 into the gamble so far, Jayson said, and are also looking to operate in a region that is now under a partial injunction as a result of a lawsuit alleging that CAURD discriminates against out-of-state residents in violation of the US Dormant Commerce Clause.
“We don’t see any light at the end of the tunnel,” he told NY Cannabis Insider. “For us, as applicants, resources were the primary objective to even get into the CAURD program ... But even if there was no injunction, there’s still no capital.”
He added, “We exhausted and leveraged everything we had to chase this program that was supposed to be turnkey, and to find out that there’s only $50 million on the high side – will there even be any money leftover for us if the injunction takes a year?”
In addition to Gov. Hochul, Senator Liz Krueger, who introduced the Marijuana Regulation and Taxation Act and whose district covers parts of Manhattan, would not respond to questions about whether the state has a “Plan B” if the fund remains empty.
Neither would Assemblymember Crystal Peoples-Stokes, whose district covers parts of Buffalo and who has been front-and-center in the state’s rollout.
The lack of acknowledgement isn’t new: neither Hochul, Krueger nor Peoples-Stokes have publicly acknowledged NY Cannabis Insider’s recent investigation that found the headliners DASNY picked to manage the social equity fund have repeatedly failed to deliver on their past promises.
Social Equity Impact Ventures is made up of former NBA player Chris Webber, entrepreneur Lavetta Willis, and a team from investment firm Siebert Williams Shank, which includes CEO Suzanne Shank and former NYC Comptroller Bill Thompson.
DASNY announced Impact Ventures as their top pick in June. Shortly after the announcement, questions began to circulate among New York’s cannabis industry: what were the team’s qualifications? Were they raising any money?
In an investigation published in December, NY Cannabis Insider found Webber and Willis had a history of making misleading or false claims about their accomplishments, including the construction of a nine-acre cannabis “compound” in Detroit and investing in entrepreneurs of color with a $100 million fund.
NY Cannabis Insider also requested documents from DASNY that would show how the agency selected Impact Ventures to raise and manage money that is essential to the state’s promise of equity in its future cannabis marketplace.
DASNY delayed producing those records for more than three months, and did so only after NY Cannabis Insider published stories about the agency’s non-responsiveness every day for weeks, and after enlisting the Committee on Open Government to intervene.
Once provided in January, the documents confirmed that Impact Ventures did submit information to the state that was not true or, at best, was a stretch.
The records also showed Impact Ventures had warned DASNY in June that the agency’s deadline to raise $150 million by September was aggressive.
Last week, a DASNY spokesperson told NY Cannabis Insider that, “as a point of clarity, Social Equity Impact Ventures is responsible for raising capital for the New York State Cannabis Social Equity Investment Fund.
“Neither DASNY nor the State are responsible for raising the funds,” the spokesperson said.
