New York Cannabis Social Equity Fund Secures $150 Million Investment

New York Gov. Kathy Hochul announced last week that the state’s cannabis social equity fund has secured a $150 million investment to support entrepreneurs who are licensed to open recreational sites – Have marijuana retail stores. Under the terms of the agreement, Chicago Atlantic Admin, LLC will invest up to $150 million in secured capital to provide credit to business owners suffering from years of cannabis prohibition.

“New York has always sought to lead the nation and create opportunity for those who have been wrongly denied privilege and opportunity,” Hochul said in a statement from the governor’s office. “Today’s announcement reaffirms New York’s commitment to building partnerships that benefit New Yorkers and right the wrongs of the past. I applaud Chicago Atlantic’s participation in this program and applaud the recognition of the value that New York’s cannabis program will bring to so many people.”

Fund established last year

Last year, Hochul included the creation of the New York State Cannabis Social Equity Investment Fund in the state’s fiscal 2023 budget. The terms of the public-private partnership have a target of $200 million, including $50 million from state cannabis taxes and $150 million in outside investment. The investments are intended to fill a gap in available investment financing for cannabis companies that are struggling to raise capital due to the continued illegality of cannabis at the federal level.

The fund will be used to support individuals affected by unequal enforcement of cannabis laws who have been granted a Conditional Adult Use Cannabis Dispensary (CAURD) license by the New York State Office of Cannabis Management (OCM) and the Cannabis Control Board. Under the state’s cannabis regulations, at least 300 of the state’s first CAURD licenses were reserved for entrepreneurs involved in the justice system.

Chicago Atlantic manages a diversified portfolio of credit investments in the cannabis industry and has invested over $1.8 billion in more than 50 investments. The Company’s flagship investment vehicle, Chicago Atlantic Real Estate Finance, is a mortgage real estate mutual fund that offers secured lending to federally licensed cannabis operators.

“Thank you Chicago Atlantic for investing in New York’s first adult-use retail licenses,” said Chris Alexander, executive director of the New York State Office of Cannabis Management. “This capital injection will provide licensees with the support they need and help New York continue its work to build an inclusive cannabis market that creates opportunities for entrepreneurs harmed by Prohibition and locked out of markets in other states.”

Loans for new pot shops

The New York Cannabis Social Equity Fund will help those who hold a CAURD license to meet the costs of setting up recreational marijuana retail dispensaries, including identifying and leasing suitable retail locations and designing, developing the construction and furnishing of the rooms. The Social Equity Servicing Corporation (SESC), a subsidiary of the Dormitory Authority of the State of New York (DASNY), is conducting the dispensary development work as a representative of the Cannabis Social Equity Investment Fund.

Last year, DASNY issued a call for tenders for a team to manage the cannabis social equity fund and raise the additional $150 million through private investment. In June 2022, the agency announced that it had awarded the contract to Social Equity Impact Ventures, a joint partnership between Webber Willis Ventures LLC, a company led by NBA Hall of Famer Chris Webber and his business partner Lavetta Willis, and one with Siebert Affiliates Williams Shank.

“We are honored that Chicago Atlantic recognizes the Fund’s role in promoting social justice in the New York cannabis industry. Together with our dedicated partners, we are committed to breaking down barriers and creating a more inclusive landscape,” said Webber. “This transformative collaboration marks a significant milestone on our journey together toward a future where everyone has equal access to opportunity and finance, strengthening communities and driving positive change.”

While the goals of New York’s cannabis social equity program have been hailed as a way to secure participation in the legal recreational market for those who have borne the brunt of decades of prohibition and patchy enforcement, critics have pitted the slow pace at opening pharmacies mocked. The first adult cannabis retailer opened its doors in the last days of 2022. But fewer than a dozen stores have opened nationwide since then, according to the OCM.