The Big Apple’s marijuana czar, Dasheeda Dawson, put in an appearance at MJBizCon this week to help spread the word that New York City is now offering both low-interest loans to dispensary licensees and direct help with finding legal real estate to lease.
While Dawson’s office, Cannabis NYC, debuted the new loan program last month, it also at the same time launched NYC Lease, which Dawson on Wednesday said was a compilation of public information on “tens of thousands of vacant storefronts” ready to be converted into legal marijuana shops in New York City.
Both of those programs, Dawson said, were designed by city officials to help pick up the slack from the faltering $200 million state Cannabis Social Equity Investment Fund, which as of mid-September had only funded 20 dispensaries, despite its original stated goal of financing 150 such shops.
“We’re trying to close a gap,” Dawson said at the Finance Forum on Tuesday at MJBizCon. “(Licensees) were told they were going to get a location. They were told they were going to get resources from the state. That didn’t quite happen.”
Dawson said that problems locating compliant real estate in New York City for dispensary licensees – who must be at least 1,000 feet from schools, churches, and other competing legal dispensaries – was a critical hurdle for many who have been permitted but not yet managed to open for business.
“You can give out as many licenses as you want to. The operationalize-conversation rate is what we should be tracking to determine if a market is actually good, and in New York, it was struggling because of the real estate piece,” Dawson said.
“New York City had more than half of the state’s applications for the first licensing window, yet we were tracking just 38% were actually opening,” she said. “That’s a gap that by next year I will hope to say we have closed.”
Dawson is also optimistic, she said after the panel, that enforcement efforts in the city with Operation Padlock have not gone to waste, despite a recent court ruling that found the crackdown to be a bridge too far. Dawson said that most of the unlicensed shops closed down by the New York City sheriff have remained shuttered, which has been a boon to the legal dispensaries.
“Operation Padlock continues. We meet as a regular basis … with the enforcement agencies. We’re at a point now where we’ve had success in really shutting down a good amount of the stores,” Dawson said. “Mostly, we’re not seeing those reopen.”
One tactic that an increasing number of New York dispensary licensees have been using, Dawson said, is to come up with creative offers to entice landlords, such as revenue sharing or even giving them a small minority ownership stake in exchange for tenancy.
“The other thing we’re seeing in New York City is landlords want to take the risk if they get equity in the business too. So a lot of our licensees are looking at equity structures in which to reduce the rent, or even convince the landlord who might be reluctant on taking the risk,” Dawson said.
Dawson also argued that New York – and likely the rest of the national cannabis industry – has to do a better job bringing former underground legacy marijuana businesspeople to the newly legal trade, and if that’s not done, then there’s no way the legal market will truly succeed.
“There’s a huge underground supply that is actually the biggest driving force of the economics in the New York market” worth “multiple billions of dollars,” Dawson said.
“Our office is really critically looking at, how do we transition in the plug? If we don’t make the plug legit in New York, the market will not work. It doesn’t matter how much you build, it doesn’t matter what pricing you put it at,” she said, using a slang term for the unlicensed side of the cannabis world.
“We’re not willing to admit about the underground market. The biggest thing is about integration, it’s not a replacement. We’re never going to be able to replace the underground market,” Dawson said. “Folks who have been already the plug have the ability to access so many people as a distribution hub, we should be capitalizing on that rather than trying to disrupt it. Those markets that do that, I think, have a much better conversion rate of the consumer.”
[[{“value”:”Dawson said New York City is prepared to help dispensary licensees with both finding locations and financing for build-outs.
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