In her first State of the State address, Governor Kathy Hochul detailed a new $200 million proposal that will help entrepreneurs from marginalized communities get a start in the Empire State's new adult-use market.
The New York Marihuana Regulation and Taxation Act, signed into law by former Governor Andrew Cuomo last March, explicitly reserves 50 percent of all weed business licenses for social equity applicants. These licenses are exclusively available to minority- or women-owned businesses, distressed farmers, disabled veterans, and anyone impacted by the disproportionate enforcement of cannabis prohibition laws.
Opening a legal cannabis business requires a massive outlay of cash, though, and many applicants who are eligible for social equity licenses lack the resources to find capital for business ventures. Governor Hochul's new program would set aside $200 million in combined state and private funding to help these applicants draw up workable proposals and finance their new cannabis ventures.
“The rise of what is estimated to be a $4.2 billion industry must create opportunities for all New Yorkers, particularly those from historically marginalized communities,” the governor's office wrote in the official State of the State handbook. “In support of that goal, Governor Hochul will create a $200 million public-private fund to support social equity applicants as they plan for and build out their businesses. Licensing fees and tax revenue will seed the fund and leverage significant private investment.”
“While New York has committed to making its cannabis industry more equitable, this action will put that commitment into practice,” the handbook explains. “New York will lead where many other states have fallen short. The governor is focused on providing more than basic business support and training for our future cannabis entrepreneurs, and this fund will provide direct capital and startup financing to social equity applicants as the State takes meaningful steps to ensuring that New York’s cannabis industry is the most diverse and inclusive in the nation.”
Activists have already identified some concerns about how the program will be implemented, though. If the seed funding for the program comes from cannabis licensing taxes and fees, it seems likely that social equity applicants won't get their grants until larger corporations have already coughed up their fees. And if this turns out to be true, then these smaller businesses may not be able to get up and running until larger companies are already established, putting them at a competitive disadvantage.
“I love the spirit; $200 million sounds good, but if it comes after the market has already opened, then it has come too late,” said Amber Littlejohn, executive director of the Minority Cannabis Business Association, to Syracuse.com.
New York does have ample time to get the fund operational, though, because regulators have already pushed the deadline for issuing business licenses back by a full year. Under this new schedule, businesses won't begin receiving their licenses until next April, which means that legal sales won't begin until the end of 2023 at the earliest.
Despite the concerns over how it will be implemented, social equity applicants are excited about the plan's potential. “This type of funding is groundbreaking and demonstrates the Governor’s commitment to provide social equity applicants an equal opportunity to participate in this innovative new industry,” said Denise Lyons and Cindy Gillespie, who are applying for an adult-use cultivation license in northern New York, to Syracuse.com.