New York Governor Kathy Hochul announced that New York will establish a $200 million fund to support social and economic equity applicants seeking adult-use cannabis licenses. Governor Hochul made the announcement during her State of the State address last week, on January 5, 2022.
It is really easy to talk about prioritizing cannabis social equity applicants in state licensure. New York’s Marijuana Regulation and Taxation Act (MRTA) went beyond paying lip-service to prioritizing cannabis social equity applicants by doing two things: (i) setting a target goal of issuing 50% of licenses to social and economic equity applicants; and (ii) mandating incubator and financial assistance programs to be administered by the Office of Cannabis Management (OCM) and the Urban Development Corporation.
Providing cannabis social equity applicants with the financial support and know-how necessary to succeed in the cut-throat world of cannabis production and distribution is critical to the success of a social equity program. Issuing 50% of licenses to social equity applicants is a hollow gesture if the licensees do not have the resources to succeed.
All of which to say that New York is putting its money where its mouth is with respect to the cannabis social equity program. Creating a fund to “support social equity applicants as they plan for and build out their businesses” is the sort of tangible step that provides a real opportunity for social equity applicants to succeed.
There are (of course) a few issues that need to be worked out, primarily how and when the social equity fund will be funded. Governor Hochul’s State of the State book describes the fund as a “public-private fund” that will be seeded by licensing fees and tax revenue and which will leverage significant private investment. That wording suggests that the fund will not be ready to provide support for cannabis social equity applicants when the application process opens (based on licensing fees providing seed funding).
It is fair to say that this sort of delay in establishing and providing seed funding risks putting cannabis social equity applicants behind the proverbial eight ball. Based on Governor Hochul’s statement, the social equity applicants who actually need funding would potentially get licensed (i.e. funded) after the non-social equity applicants whose licensing fees may be necessary to seed the program.
It is equally possible that as details emerge about the specifics of the social equity fund, it will turn out that the CCB and OCM address this concern. Given the significance of this commitment (regardless of funding sources), our bet is that New York finds a way to provide real and timely support for social equity applicants.
Stay tuned for new developments in New York’s cannabis industry as we wait for the adult-use rules and regulations to be released!