Cannabis Dispensary Operators Urge Governor to Forgive High-Interest Loans
A group of cannabis dispensary operators in New York is calling on Governor Kathy Hochul to forgive tens of millions of dollars in high-cost loans that they claim are threatening the viability of their businesses. The loans were made through a social equity loan fund established by the Hochul administration to provide capital to dispensary owners, but the operators argue that the fund has instead perpetuated economic inequities.
The group, which includes operators who were affected by the state’s former, racially discriminatory drug laws, sent a letter to Hochul detailing their struggles to make monthly payments on the loans, which have interest rates as high as 13%. One operator, Roland Conner, signed a $1.9 million loan and was struggling to make payments within a year.
The loan fund, which was proposed by Hochul in 2022, was designed to finance the first 150 cannabis dispensaries in the state. However, the fund has failed to attract private investors and has instead relied on state funds and a $28 million loan from Chicago Atlantic, a private investor. The fund has provided tens of millions of dollars in loans to dispensary owners, but many are struggling to make payments.
The operators are calling for the state to forgive the loans or convert them to grants. They argue that the loans are “predatory” and that the high-interest rates and unexpected construction costs are making it difficult for them to stay in business. They are also calling for the state to adopt a program similar to one in Illinois, which made nearly $9 million in forgivable loans available to social equity cannabis licensees in 2022.
Three key state lawmakers have called for some form of borrower assistance, including State Assembly Majority Leader Crystal Peoples-Stokes and state Senators Liz Krueger and Gustavo Rivera. The governor’s office has not commented on the request, but has said that it remains committed to the social equity program and will continue to work with licensees to establish programs that increase access to capital and promote economic growth.
The operators argue that forgiving the loans would be a step towards repairing past harms and creating meaningful change. “This moment represents an extraordinary opportunity for New York State to lead the nation by demonstrating how a restorative justice program can repair past harms and create meaningful change,” they wrote in their letter to Hochul.
