Crystal Peoples-Stokes, the majority leader of the state Assembly, advocated Tuesday to extend financial aid to struggling cannabis store operators who have been saddled with high-cost loans from a “social equity fund” created as a core part of New York’s marijuana legalization program.
Speaking in Albany at the monthly Cannabis Control Board meeting, Peoples-Stokes (D-Buffalo) said that the license fees paid by medical marijuana companies to enter the retail market should be tapped to assist the operators, whose plight was the subject of a recent article in THE CITY.
She singled out for assistance “applicants who were supported by the fund,” which was designed to help people who were affected by abandoned racially discriminatory drug laws, but now were beset by “overly high price loans.”
The state awarded the borrowers the first round of cannabis operating licenses beginning in November 2022, who qualified if they or a family member had been convicted of a marijuana-related offense. Gov. Kathy Hochul proposed creating a $200 million social equity fund to finance opening 150 dispensaries operated by the first licensees. Those licensees would in turn repay the costs of building out their stores through fund loans.
But the state-backed investment fund has missed nearly all of its goals. In more than two years it has opened only 21 stores out of the planned 150. The costs of the store buildouts have far exceeded estimates, saddling licensees with huge debts and strict repayment terms.
Last month, THE CITY revealed how Roland Conner, who operates Smacked — the first dispensary in the state financed by the fund — has been unable to pay all of his bills. Another licensee with a shop supported by the fund, Berkay Sabat, turned to a Florida cannabis company for financing to stay open. Meanwhile, the managers of the fund have made $1.7 million in fees in a one-year period.
Peoples-Stokes proposed helping fund borrowers by using part of the fees paid by medical cannabis companies in exchange for entering the general retail market. Those fees — $20 million per company — include a $5million down payment and were enacted last September.
Referring to the fund’s customers, known as Conditional Adult Use Retail Dispensary, or CAURD, licensees, she said, “I’m hopeful that some of that can be used to help those CAURD applicants who are stuck with these overly high price loans that they have to pay back for the properties that they have.”
The New York Medical Cannabis Industry Association filed a lawsuit earlier this month alleging that fees required for medical cannabis companies are unconstitutional.
The suit argues that the current fee structure does not comply with the state cannabis law since, according to a state report this year, none of that money has been used toward funding social and economic assistance.
