New York’s Restrictive Loan Program for Equity-Owned Marijuana Dispensaries Raises Concerns

New York’s Cannabis Financing Maze: Unraveling Loan Program Concerns

Hey there, fellow cannabis enthusiasts! Today, we’re diving deep into the world of cannabis finance, specifically New York’s bold venture to support social equity goals in the cannabis industry. You’ve probably heard about New York’s $200 million fund to help build dispensaries and provide opportunities for individuals with past cannabis-related . Sounds like a great plan, right? Well, not so fast! There are some serious Loan Program Concerns that have come to light, and we’re here to break it all down for you.

What’s the Deal with New York’s Cannabis Loan Program?

So, here’s the scoop. Back in January 2022, Governor Kathy Hochul unveiled an ambitious plan to support social equity in the cannabis industry. The idea was to create a $200 million fund to help budding set up dispensaries in prime locations. The goal? To give those who have been disproportionately affected by decades of cannabis-related policies a chance to thrive in the .

Seems like a noble cause, right? Well, fast forward nearly two years, and we’re starting to see the fine print of this plan. The loan documents that Conditional Adult-Use Retail (CAURD) licensees have to sign to get financing from the New York Social Equity Cannabis Investment Fund reveal some pretty restrictive terms.

Loan Program Concerns: What’s in the Fine Print?

Let’s get into the nitty-gritty of these loan documents. First off, the public-private fund has the authority to rack up significant expenses without consulting the borrowers. That means dispensary owners may find themselves with unexpected bills and little control over their expenses. Ouch!

But it gets even more interesting. If a dispensary owner wants to pay off their loan early, they still owe a portion of the interest for the entire 10-year term. That could add up to hundreds of thousands of dollars. Talk about a financial burden!

The Curious Case of Profit Margins and Costs

Now, here’s where things get a bit tricky. These loan agreements also put a cap on how much profit margin a store can charge on its products. Plus, there are limits on staffing costs and executive salary increases. In other words, while dispensary owners can choose the color scheme of their shops, they can’t control their costs effectively.

This level of control has raised eyebrows in the industry. Jayson Tantalo, co-founder of the New York Retail Cannabis Association, wonders why a supposedly great program needs so much micromanagement. It’s a valid question. Shouldn’t trust in business owners to run their operations be a given?

Monitoring Dispensaries: Big Brother is Watching

The loan documents don’t stop at controlling expenses. They also give the New York Social Equity Cannabis Investment Fund the power to monitor dispensaries once they’re up and running. This includes access to their sales tracking software and direct communication with the business’s accountants. But what happens to that data, and how it may be used, remains a mystery.

Lavetta Willis, one of the fund’s partners, claims it’s all about measuring the metrics of the business to ensure success. But some in the industry are still wary of such oversight. It’s not every day that a private lender wants to micromanage everything you do to ensure they get their money back.

Comparing New York’s Program to Other States

Now, let’s take a step back and look at how New York’s program stacks up against other states with cannabis social equity initiatives. In Illinois, for example, the governor announced low-interest forgivable loans for cannabis entrepreneurs with just a 4 percent interest rate after an 18-month grace period. California offers grants or low-interest loans, depending on the municipality, and Massachusetts provides no-interest and forgivable loans as part of its social equity program. even awarded $250,000 grants to social equity cannabis businesses.

New York, on the other hand, took a different approach by bringing in private capital. While the state put up $50 million, it struggled to find an investor willing to stake the remaining $150 million. It wasn’t until June this year that New York secured the funds from Chicago Atlantic, a fund. This means the state isn’t investing directly in cannabis dispensaries but is instead loaning the fund money at an interest rate reflecting the industry’s challenges in accessing traditional .

Mixed Feelings Among Dispensary Owners

So, how are dispensary owners feeling about all of this? Well, it’s a mixed bag. Some, like Akele Parnell, see the terms as fair. He’s part of a team for a CAURD license in the Bronx and believes the terms are reasonable, especially considering the challenges of accessing capital in the cannabis industry.

However, not everyone is jumping on board. Carl Anderson, a disabled veteran in The Bronx, passed on a dispensary location offered by the Dormitory Authority because of the estimated buildout costs and monthly rent. The area had lower foot traffic, making it difficult to cover expenses. He questioned where he’d find the money.

Loan Program Concerns: Transparency and Criticisms

Transparency has been a key issue. Some licensees raised concerns about the lack of transparency in loan terms and high rents for available . They felt that the program was inequitable and counterproductive to its intended purpose.

At a meeting with state officials, Carson Grant, a licensee, expressed his frustration, saying, “You guys keep saying ‘transparency.’ I don’t know what anything costs. I don’t know what a light bulb costs. Just tell us the numbers!” It’s clear that many licensees are seeking more clarity and fairness in the program.


So, there you have it, my friends. New York’s cannabis loan program, meant to support social equity, has raised some serious concerns among dispensary owners. While it’s a step in the right direction, the fine print has left many scratching their heads.

We hope this deep dive into Loan Program Concerns has shed some light on the challenges facing the cannabis industry in the Empire State. As always, we’ll keep you updated on the latest developments. And a big shoutout to Rosalind Adams for bringing this issue to our attention.

Stay tuned for more cannabis news, and remember, it’s not all sunshine and rainbows in the world of weed. But we’ll keep blazing the trail for you, one story at a time!

Rosemary Puffman
I'm Rosemary, a staunch supporter of cannabis legalization and its potential benefits. My roles as a writer, cannabis entrepreneur, and informed investor allow me to contribute to the evolving narrative around cannabis. Through my writing, I aim to destigmatize and educate, while my business ventures and strategic investments align with my belief in the positive impact of responsible cannabis use.

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