In June 2022, New York Governor Kathy Hochul announced a $200 million public-private fund to finance cannabis dispensaries operated by individuals disproportionately affected by the war on drugs. However, an investigation by THE CITY’s Rosalind Adams has uncovered a concerning imbalance in the deal, favoring the private equity firm Chicago Atlantic at the expense of the state’s social equity objectives.
The agreement heavily favors Chicago Atlantic, exposing the state to substantial risks. Internal documents from the New York Office of Cannabis Management (OCM) question the deal’s viability and its potential to overestimate revenue and profitability. Despite these concerns, negotiations led to a secret agreement benefiting Chicago Atlantic.
Adding to the controversy, critics and legal experts have compared the arrangement to distressed debt lending, burdening licensees with high construction costs and interest rates beyond initial state estimates. Roland Conner, owner of Smacked on Bleecker Street in Greenwich Village, expresses concerns about potential defaults due to stringent loan terms.
Details of the deal remain confidential, with New York state authorities denying Freedom of Information Law requests. The state comptroller’s office and key lawmakers express lack of involvement in the deal, highlighting a glaring lack of oversight.
Meanwhile, Chicago Atlantic has secured favorable terms, including leasing rights and a $100 million commitment for property development, raising further concerns about profiteering at the expense of marginalized communities. The handling of New York’s cannabis program appears to reflect a combination of ineptitude and potential corruption. While officials might have intended to support marginalized groups, their actions suggest a lack of due diligence and transparency. Social equity applicants are expressing anger, with some choosing to walk away from the deal due to unfavorable terms.
