New York Governor Kathy Hochul has announced a major investment in the New York State Cannabis Social Equity Investment Fund (the "Fund") that aims to provide support to individuals affected by the unequal enforcement of cannabis prohibition.
Chicago Atlantic Admin, LLC ("Chicago Atlantic") is committing up to $150 million in senior secured capital to the Fund, bringing it closer to its funding goal of $200 million. This investment, combined with the state's $50 million contribution from cannabis industry revenues, will pave the way for New York’s justice-impacted entrepreneurs to establish their own dispensaries.
The significance of this partnership cannot be understated. It reflects New York's commitment to rectifying past injustices and creating opportunities for those who have been historically marginalized. By investing in the Fund, Chicago Atlantic recognizes the value and potential of New York's cannabis program in providing opportunities for a wide range of individuals.
With the support of Chicago Atlantic and the state's investment, justice-impacted individuals holding Conditional Adult Use Cannabis Dispensary (CAURD) licenses from the New York State Office of Cannabis Management and Cannabis Control Board will have the opportunity to receive turnkey dispensaries to launch their businesses. The allocated funds will cover various aspects such as securing, leasing, designing, constructing, and furnishing the CAURD dispensaries. Eligible CAURD licensees will benefit from subleasing arrangements, allowing them to focus on running their businesses while repaying the set-up costs associated with the Fund program through low-interest loans.
Chicago Atlantic's extensive experience in the cannabis industry and its diverse portfolio of credit investments position them as a suitable partner for this initiative. With over $1.8 billion deployed across more than 50 investments, Chicago Atlantic has established itself as a leader in cannabis lending. Led by a management team well-versed in real estate credit, direct lending, and risk management, Chicago Atlantic's investment vehicle, Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI), primarily provides senior secured loans to state-licensed cannabis operators in limited-license jurisdictions across the United States.
Founding Partner John Mazarakis and Managing Director Peter Sack of Chicago Atlantic expressed their pride in supporting the Governor's initiative and New York's CAURD licensees. Their partnership with various entities, including the Cannabis Social Equity Investment Fund, the Dormitory Authority, the Cannabis Control Board, and the Office of Cannabis Management, aims to promote social equity and innovative capital solutions. They believe that the success of New York's social equity initiatives and CAURD licensees will have a positive impact on the entire industry, further supporting the development of the legal cannabis sector nationwide.
The Social Equity Servicing Corporation (SESC), a subsidiary of the Dormitory Authority of the State of New York (DASNY), is responsible for executing the development of dispensaries as an agent for the Cannabis Social Equity Investment Fund. Outcoming President and CEO of DASNY Reuben McDaniel, who stepped down earlier this month following mounting criticism over allegations of a conflict of interest, expressed his pride in partnering with Chicago Atlantic to fulfill the vision of providing opportunities and hope for individuals affected by past drug laws. This partnership will enable many people to overcome the challenges they face in accessing capital and achieving economic security.
Chris Alexander, Executive Director of the New York State Office of Cannabis Management, acknowledged Chicago Atlantic's investment as a significant boost for the state's adult-use retail licensees. The infusion of capital will provide essential support to licensees and contribute to the establishment of an inclusive cannabis market that empowers entrepreneurs previously harmed by prohibition and restricted from other state markets.
Tremaine Wright, Chair of the Cannabis Control Board, commended Governor Hochul's announcement and described it as a transformative moment for the New York State Cannabis Social Equity Investment Fund. This partnership strengthens the fund, ensuring that it can effectively meet the needs of licensees and empower them to thrive in New York's evolving cannabis industry.
Assembly Majority Leader Crystal Peoples-Stokes expressed her excitement about the realization of their collective vision for the New York Social Equity Cannabis Fund. She extended her gratitude to Chicago Atlantic for their contribution, emphasizing the significant impact these funds will have in supporting CAURD licensees in getting their businesses up and running.
William Thompson, Principal of Social Equity Impact Ventures, highlighted the crucial role played by Chicago Atlantic's expertise at the intersection of cannabis, real estate, and credit. He commended the collaboration between the public and private sectors.
Thompson highlighted the extensive efforts undertaken by the Fund, in partnership with DASNY, to evaluate numerous potential store locations across the state and execute leases. This comprehensive approach ensures that the design, construction, training, and operations for store operators are effectively implemented. The speed at which this new, highly regulated industry has been launched is a testament to Governor Kathy Hochul's commitment to social justice.
Chris Webber, Principal of the Cannabis Social Equity Investment Fund, expressed gratitude to Chicago Atlantic for recognizing the Fund's role in fostering social equity within New York's cannabis industry. This transformative collaboration marks a significant milestone in the journey towards a future where every individual has equal access to opportunity and funding, empowering communities and driving positive change. He commended Governor Hochul for challenging them to do things differently in New York, resulting in groundbreaking outcomes.
The Cannabis Social Equity Investment Fund, authorized as part of the FY 2023 Enacted Budget, represents a pioneering public-private limited partnership. Its objective is to position social equity entrepreneurs for success in New York's newly established adult-use cannabis industry. The Fund allows the state to invest in a private fund that finances the leasing and equipping of conditional adult-use retail dispensaries across New York State, operated by individuals who have been disproportionately impacted by the enforcement of cannabis laws. This initiative is the first of its kind in the United States.
Governor Hochul's proposal for a Public-Private Partnership last year, followed by its enactment by the Legislature, demonstrated a commitment to providing support for individuals disproportionately affected by the Rockefeller Drug Laws. Leveraging the finance, procurement, design, and construction expertise of DASNY, the Governor facilitated the creation of the SESC as a subsidiary to oversee the Fund's execution. In the months since the Fund's establishment, DASNY has engaged in a competitive procurement process to secure a Fund Manager, Point of Sale system, and design-build firms.
Additionally, DASNY has conducted evaluations of over 10,000 commercial retail properties throughout New York State, executed leases, and engaged with property owners, ensuring the necessary infrastructure is in place to support CAURD licensees.
As the Fund continues to grow and empower social equity entrepreneurs, it serves as a model for other states seeking to create inclusive and equitable cannabis markets.