Questions about New York’s cannabis social equity fund persist months after missing the Sept. 1, 2022, deadline to secure $150 million in financing. The fund, which is being managed by former NBA star Chris Webber and shoe mogul Lavetta Willis, could face considerable difficulty in supporting 150 retail dispensaries with or without full funding.
The $150 million, which will ostensibly come from private investors, is in addition to $50 million in state funding that Governor Kathy Hochul pledged in early 2022 when announcing the creation of the fund.
Regardless of how much is raised, those dollars will potentially have to be split between 150 Conditional Adult Use Retail Dispensary (CAURD) license holders — an average of $1.3 million each to locate, secure the lease and renovate commercial space for a dispensary.
The state is allocating the 150 CAURD licenses across 14 regions based on population density. Considering the 90 of the 150 — more than half — have been earmarked for a New York City borough, there is likely to be significant real estate and renovation costs that exceed the $1.3 million average allocation.
The state approved the first 36 CAURD licenses in November. That number grew to 66 in total about two weeks ago. Since then, two have officially opened for business, though the most recent one, Smacked, will only operate through Feb. 20 before it closes for renovation.
Technically, a CAURD licensee could pursue a dispensary with the support of the fund, but then they would have to somehow find funding in a state that makes it particularly difficult for out-of-state cannabis investors to get involved.
Last month, the Dormitory Authority of the State of New York (DASNY), which is administering the Cannabis Social Equity Investment Fund Program, released its first report. Since the fund was created last year, over 10,000 locations for dispensaries have been reviewed, with 2,300 identified as possible locations and negotiations have started with about 350 property owners, according to the report.
The report was not more specific about negotiations or locations, but in December, DASNY announced it had secured its first lease for a CAURD dispensary at a storefront in Harlem, across the street from the famed Apollo Theater.
Since that announcement, efforts to renovate and assign to a license holder have been mired in community pushback, which has reportedly paused plans for the location.
New York is reserving the first round of 150 licensed dispensaries to social equity candidates. Along with the issuance of CAURD licenses, the state also announced plans to create a $200 million Cannabis Social Equity fund that “is intended to be a social impact investment fund exclusively dedicated to financing the establishment, development, leasing, and initial build out of storefront conditional adult-use retail cannabis dispensaries.”
Governor Hochul announced that Social Equity Impact Ventures, the partnership between Webber and Willis, had been placed in charge of raising money for, and then managing, the $200 million fund.
Chicago-based Good Tree Capital Partners Fund was the only other applicant. DASNY has yet to release any scoring information between the two applications.
Social Equity Impact Ventures’ previous work in cannabis often involved partnering with Jason Wild, chief investment officer of JW Asset Management. The two groups announced plans to create a $100 million cannabis social equity fund two years ago. The partnership also announced plans to build a $50 million cannabis training and education facility in Detroit.
The Webber Wellness Center is reportedly still under construction, but the earlier plans for the social equity fund seem to have fizzled.
When reached for comment, a spokesperson with JW Asset Management said that the $100 million Cannabis Impact Fund never launched. He also said that JW Asset Management “is not associated with Chris Webber or the team that’s working in New York.”
Among other cannabis-related assets, JW Asset Management owns multi-state operator TerrAscend, which operates in California, Pennsylvania and New Jersey, where it is one of 12 licensed, vertically integrated operators serving the state.
A recently-filed federal lawsuit from Scotts Miracle-Gro alleges that TerrAscend attempted to subvert the horticulture company’s plans to acquire one of New York’s 10 licensed medical cannabis producers. The lawsuit claims that TerrAscend was interested in acquiring the same New York company.
A spokesperson from DASNY did not respond to requests for comment. Social Equity Impact Ventures also failed to respond to a request for comment.
