The state of NY has done countless things wrong in rolling out recreational cannabis licenses through the Office of Cannabis Management. It is unclear if any state has done it right, although our lawyers suggested that Missouri did the best job and New Jersey isn’t terrible but it has been an utter shitstorm in every state.
There are still ways to make right on some wrongs. Back in 2022, Hochul pitched the idea of creating a $200M fund to help cannabis license holders who had been previously convicted: great idea and the right thing to do, but it wasn’t properly executed.
Instead, the Office of Cannabis Management (OCM) partnered with DASNY (Dormitory Authority of the State of New York) for these loans. Bill Thompson, who was the President of DASNY (a government agency that should be shut down), partnered with a private equity firm called Chicago Atlantic. Considering private money was taking a high-risk to loan money to the lucky license holders, they covenants were high and they payback at 13% made the entire deal untenable but that was the deal they landed on.
Fast forward, the people who took that debt were promised by the state that the cannabis license was akin to changing generational wealth, that it was a golden ticket. Wrong. Debt is debt, and running a retail shop with regular margins is hard, and combining that with a 13% interest loan and 280E (cannabis federal taxes), these loaners were screwed the second the ink signed on the paper.
Now, the people who took the deals with Chicago Atlantic are drowning. They have thrown out a lifeline for NY State to help. The government never learns; they should not have been in the business of setting up these deals in the first place: shame, shame on Bill Thompson.
Kathy Hochul should allow NY State to pay off all these loans and refinance them with low interest rates with NY-based banks that the state will back if the company defaults. If they default, the state should take back the license. Do the right thing; the people who took the money didn’t know any better; help them right this mess.
