Cannabis Dispensary Owners Urge Governor to Forgive High-Cost Loans
A group of cannabis dispensary operators 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 created by the Hochul administration to provide capital to dispensary owners, but the operators say the fund has instead perpetuated economic inequities.
The group, which includes operators who were affected by the state’s former, racially discriminatory drug laws, is urging the governor to forgive the loans or convert them to grants. They argue that the loans are predatory, with high-interest rates and high construction costs that were not anticipated.
The fund, which was proposed by Hochul in early 2022, was designed to provide financing for the first 150 cannabis dispensaries in the state. However, the fund has been plagued by problems, including a lack of private investment and a failure to attract the number of stores it was intended to support.
According to a letter to the governor from the group of operators, the fund has loaded store licensees with steep costs and high-interest loans that many owners say are sinking them. The letter also argues that the fund’s complex financial arrangements make it difficult to determine the impact of loan forgiveness on taxpayers.
The governor’s office has declined to fully disclose the details of the fund’s financial arrangements, citing public records requests and requests from advocates.
The operators are calling for the state to adopt a program based on an Illinois model that made nearly $9 million in forgivable loans available to social equity cannabis licensees in 2022. They argue that this approach would be more effective in promoting social equity and reducing economic inequities.
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 operators’ letter concludes by saying, “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.”
