New York’s effort to seed home-grown cannabis businesses from communities most impacted by the War on Drugs continues to take shape as the state moves to name a manager to run a fund being set up to provide financial support.
Tremaine Wright, chair of the New York State Cannabis Control Board, said earlier this week that legal cannabis sales could begin by the end of 2022 as the state tackles the difficult task of building a regulatory regime for the industry.
“We’re like a startup…we’re just trying to be careful,” Wright said at a panel talk in New York City on Wednesday on women making an impact on social equity that was sponsored by Foley Hoag LLI and Vantage Builders and Rebelle, which operates a dispensary in Great Barrington, Mass.
New York State also plans to issue licenses to people with cannabis-related criminal offenses to allow them to make the first adult-use cannabis sales. Wright said the state is currently reviewing applications and it’s requiring some business experience to get a license.
“We’ve gotten some pushback on the business experience requirement, but the money [from the fund given to applicants] has to be paid back,” Wright said.
The state has committed $50 million of a projected $200 million fund for social equity and plans to raise the rest from outside investors in the vein of a private equity or venture capital fund, a spokesperson for Gov. Kathy Hochul’s office said.
The Dormitory Authority of the State of New York, which provides construction, financing, and services for the state, is readying a bid to begin the selection process for a fund manager for the state’s social equity fund, the spokesperson said. The pool will provide access to capital, including support in getting leases for retail dispensary locations.
Licensing fees and tax revenue will seed the New York fund, along with private investment, to fund direct capital and startup financing to social equity applicants. New York plans to award 50% of all licenses, or about 200, to equity applicants, including individuals from impacted communities, minority- and women-owned businesses, distressed farmers, justice-involved individuals and service-disabled veterans. The state is also creating a state-run business incubator.
Separately, the state is also currently gathering comments for its proposed regulations on conditional dispensaries for social equity license holders.
The overall effort is intended to avoid the issues with social equity licenses that cropped up in other states, where some were forced to sell their licenses because of a lack of financing and other support.
In other recent moves, New York will allow cannabis companies to take the same tax deductions as other businesses for their state income taxes. Currently, a federal measure called 280E does not allow cannabis companies to claim any of the same tax deductions.
In February, New York Gov. Kathy Hochul signed into law a measure that would allow the state’s hemp farmers to begin growing adult-use cannabis this season. The measure passed both houses of the state legislature and will provide conditional adult-use cannabis cultivator licenses for existing hemp farmers.