By JENNIFER PELTZ – Associated Press
NEW YORK (AP) — In an ambitious move to make its new marijuana industry fair, New York is offering a $200 million fund to help entrepreneurs of color and some other groups get into the business. But officials have yet to nail down some elements that experts say are crucial to making the investment effective.
Governor Kathy Hochul’s proposal, unveiled last month, would be one of the largest sums any state has committed to trying to ensure diversity and social equity in the growing legal pot industry. The plan is also somewhat unusual for relying on money from private sources.
In a recent policy document, the Democratic governor’s administration pledged to create the “most diverse and inclusive” marijuana industry in the country.
“New York will lead where many other states have failed,” he said.
Potential equity contestants hope so. But they are keen to hear who would provide private funding and whether the money would help cover the costs of finding a license, not just start-up expenses for people who can afford to get one.
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“Two hundred million dollars sounds great,” says Amber Littlejohn, executive director of the Minority Cannabis Business Association, but “it’s really not so much the amount as the timing of funding and services. What if it comes after the point of application, its ability to have an impact is really limited.”
Licensed sales are set to launch next year in New York, where recreational use of the drug by adults was legalized last March.
New York’s equity program could provide both grants and loans to eligible businesses, which would include those owned by women or minorities, struggling farmers, disabled veterans and people from communities that have undergone heavy police operations.
Lawmakers and the governor’s office are negotiating on the proposed fund. Details are still in the works, said Chris Alexander, executive director of the state Office of Cannabis Management.
“We want to make sure these investment firms have a chance to start the industry here, and we’re very aware that they need these resources as soon as possible,” he said.
He said the agency aims to limit application costs and documentation requirements to make obtaining the permit accessible.
Charlotte Hanna recalls what it took to open her company’s dispensary in Massachusetts, called Rebelle – consultants, lawyers, engineers and tens of thousands of dollars in down payment on a building. She covered the costs with money she earned flipping houses, but she applauds the New York fund as an “incredible” resource.
“It’s just a creative way the state is looking at helping fund people who have had a hard time getting into the market,” says Hanna, CEO of Rebelle’s minority woman-owned parent company. , Community Growth Partners. It aims to expand to Illinois, New Jersey and its home state of New York.
Recreational marijuana use is now legal in one-third of US states and medical marijuana in nearly three-quarters.
Diversifying the marijuana trade and improving opportunities for people who have borne the brunt of America’s decades-long war on drugs has become a priority in some states as the legalization of pot has created a new multi-billion dollar industry made up of predominantly white owners, executives and investors.
Social equity efforts range from licensing priorities to training to loans, but progress has been slow in many states.
“Access to capital is absolutely one of the biggest barriers to entry and barriers to success for minorities and women in the cannabis industry,” says Tahir Johnson, director of social equity and inclusion in the Marijuana Policy Project, a pro-legalization group.
Opening a marijuana business can cost hundreds of thousands of dollars or more. Because pot is federally illegal, many banks are unwilling to lend to vendors, growers, and processors, and they are ineligible for loans backed by the federal Small Business Administration.
Many entrepreneurs start by tapping personal funds, relatives or friends – resources that are not equally available to everyone in a country with wealth gaps between women and men and between whites and people of color.
Social Equity applicants are eligible for license fee discounts in some states. Many offer grants or loans.
Washington State provides $1.7 million annually for grants. Connecticut has authorized the borrowing of up to $50 million for assistance, including low-interest loans and capital. Some cities and counties, especially in California, have their own initiatives; Los Angeles gave $6 million in one year.
New York’s plan is modeled after Illinois, which works with private lenders to secure up to $34 million in loans.
The Empire State’s proposal so far envisions allocating $50 million – the money the state would advance before collecting it from license fees and taxes – and looking to private investors for the remains, with a private partner helping manage the effort, the cannabis agency said. director.
The State Dormitory Authority, a building agency, could help social equity businesses line up and build locations.
“We try to identify all the things that people needed that they didn’t have in other states,” Alexander said.
Associated Press writer Marina Villeneuve contributed from Albany.
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