New York Secures $150 Million Investment to Fully Fund Social Equity Cannabis Retailers

LOS ANGELES–  In a significant boost to New York’s social equity cannabis program, Chicago Atlantic Admin LLC has committed up to $150 million in senior secured capital for the Social Equity Cannabis Investment Fund. The announcement, made by Gov. Kathy Hochul’s office on Friday, ensures that the $200 million fund aimed at supporting social equity marijuana retailers will now be fully funded.

The funding will be utilized on a rolling basis to lease dispensary space for qualified cannabis retail locations, providing conditional adult use retail dispensary (CAURD) licensees with the necessary resources to establish their businesses. This initiative aligns with Hochul’s pledge made in March 2022 to offer aspiring entrepreneurs a significant advantage in entering the cannabis industry. The plan was integrated into the 2023 New York state budget and was to be primarily funded by the Seeding Opportunity Initiative.

Governor Hochul expressed her satisfaction with the investment deal, stating, “Today’s announcement reinforces New York’s commitment to building partnerships that benefit New Yorkers and setting right the wrongs of the past. I welcome Chicago Atlantic’s participation in this program and applaud their recognition of the value that New York’s cannabis program will provide to so many.”

Chicago Atlantic Admin LLC’s involvement in the cannabis industry lends credibility to their latest investment. The company already boasts an extensive real estate portfolio and experience in marijuana real estate and lending. Its prime investment vehicle, Chicago Atlantic Real Estate Finance (Nasdaq: REFI), collaborates with cannabis companies across multiple states in the United States.

The infusion of funds into the Social Equity Cannabis Investment Fund serves as a victory for Governor Hochul’s administration and the New York Office of Cannabis Management, which had faced criticism for the slow rollout of the state’s recreational marijuana industry.

Prior to this investment, the Social Equity Cannabis Investment Fund had only received $50 million in state funding, with the remainder expected to come from private investors. The lack of promised funding for social equity retailers had become a contentious issue.

Under the terms of the investment, Chicago Atlantic could secure a return of up to 8% on its $150 million contribution. This figure was based on the estimation of private investors’ expected return outlined in the request for proposals issued by the Dormitory Authority of the State of New York in May 2022. The authority will oversee the disbursement of funds and subleases to CAURD license holders.

The new investment is expected to expedite the authorization of new locations and leases for CAURD license holders. Thus far, only a few state-sponsored dispensary funding loans have been publicized out of the 251 CAURD licensees.

William Thompson, principal at Social Equity Impact Ventures, expressed satisfaction with the progress made in finding dispensary locations. Thompson stated, “We have been conducting evaluations of thousands of potential store locations across New York State. The effort has led to dozens of executed leases, while at the same time effectuating the design-build process, training, and operations for store operators.”

It is important to note that the funds allocated to social equity dispensaries will be provided in the form of low-interest loans rather than grants, as reiterated in Friday’s press release. This distinction aims to clarify any misunderstanding among stakeholders regarding the nature of the financial assistance.

With the $150 million investment from Chicago Atlantic, New York’s social equity cannabis program takes a significant step forward, providing a much-needed boost to aspiring entrepreneurs and fostering economic growth in the state.