On Monday, New York City launched a new loan program specifically aimed at helping scores of social equity cannabis companies get their feet under them.
The centerpiece of the new initiative is a low-interest loan program, dubbed the Cannabis NYC Loan Fund, that pledges up to $100,000 at 9.5% interest for three years for each eligible Conditional Adult Use Retail Dispensary (CAURD) licenseholder in the city. The fund currently has $2 million to split among recipients.
It’s essentially a municipal version of the state’s Cannabis Social Equity Fund, which as of Sept. 15 had helped 20 CAURD licensees lock down dispensary sites, far short of the state’s original goal of financing the build-out of 150 dispensaries.
The city’s Department of Small Business Services and the Economic Development Corp. are now taking applications for loans from CAURDs, and the fund will be administered by Tuatara Capital, a longstanding cannabis equity firm based in New York City.
The money provided to CAURDs is intended to be “unrestricted” and can be used for whatever the licensees need, according to Dasheeda Dawson, the director of Cannabis NYC, who acknowledged that many of the 463 CAURD permitholders statewide from last year have had trouble getting open for business. She noted that CAURD licensees can apply online, but only until Nov. 4.
According to a recent report filed with the legislature by the state Office of Cannabis Management, only 205 CAURD permits have been finalized since early versions were awarded last year, and just 150 of the 463 have managed to open for business across the state.
“Financing and real estate tend to be real challenges for any licensee in the space, let alone someone that has had a previous arrest or incarceration,” Dawson said. “We have 85 operational stores in New York City, getting very close to that a hundred store mark. But at the same time, we have a good percentage, well over a hundred licensees, that have not yet operationalized.”
“The cannabis NYC loan fund is going to do some of that work in closing the gap,” Dawson said.
Dawson said a second round of funding assistance with $6 million in additional capital will be available next year for non-retail licensees, such as social equity processors, but the first loan round is intended to get as many legal dispensaries open as possible.
“The story on the ground is there are a lot of people who didn’t know that this is what it was going to be when they signed up, are trying to make it work, have gone along with the punches through injunctions and other pauses,” Dawson told Green Market Report.
“Getting people over the finish line on things with the Department of Building, and utilizing our other SBS services, pointing them out when necessary to CAURD licensees, that has been extremely helpful for those that have been able to operationalize.”
Although the initial pool of capital is relatively small, Dawson said she thinks it can still be valuable help to many CAURDs, and said she’s heard of some that have been desperately looking for just a few thousand dollars to pay for unexpected bills.
“Sometimes people have gotten all the way to the point where they can open but they don’t have all their security cameras,” Dawson said. “There are some things that are really just the smaller hindrances to getting people over the finish line. … For a lot of the licensees, they’ve been nickeling and diming, bootstrapping this process anyway.”
It’s also not the only program for CAURD permitholders in New York City, Dawson said.
She noted that the city also offers help connecting licensees to potential landlords through NYC LEASE with networking events beginning on Oct. 9, a cannabis job training program for newly released convicts called Cannabis Reentry Employment Assistance and Training Experience (CREATE), an entrepreneurial training program dubbed FastTrac aimed at those with small startups, and free services such as legal assistance through the Small Business Service’s NYC Business Solution Centers.
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