New York State is seeking the return of its $50 million investment into legal cannabis dispensaries, over the objection of activists, after Democrat Gov. Kathy Hochul's plan to revitalize underserved communities hasn't yielded results, The New York Times reported on Tuesday.
In 2022, Hochul's Cannabis Social Equity Investment Fund was established to aid those small business owners with marijuana convictions to be among the first to open legal marijuana dispensaries in New York.
Yet, three years later, only 22 of the planned 150 stores have opened. Some owners are now pushing back claiming Albany wasn't clear about a little-read provision in the legislation that said once marijuana-related licensing fees and sales taxes earned enough revenue, the state would seek the return of its investment.
Only after this portion was returned to the government would the funds then begin to be distributed back to the low-income Black and Latino neighborhoods where most the pot arrests have occurred.
Joseph W. Belluck, an attorney who is aiding the communities with reinvestment grants funded by cannabis revenue, said the state's mandate coupled with President Donald Trump's goal to eliminate diversity, equity, and inclusion program puts the entrepreneurs in a bind.
"It's not the fault of these communities or applicants that this fund failed and now has to get paid back," Mr. Belluck said. "To ask them to bear the burden of the repayment is just completely unjust and not in the spirit of the law."
The government loans came with terms that removed control of certain business decisions from owners, such as construction costs, but have now backed many proprietors into what they call a "debt trap."
Kassandra White, a spokeswoman for Hochul's office said the governor is simply abiding by the terms of the 2022 bill.
"Legislation was passed in 2022 to require repayment of this investment," she said. "The state is now following that law."
The timing of the state's request comes at a curious time for both the state and the governor's own words as she recently publicized the state's financial success in legalized marijuana sales.
In December of 2024, Hochul announced that the industry had reached $1 billion in retail sales.
"Earlier this year, my administration took critical steps to promote progress and economic opportunity within New York's budding cannabis industry, including signing new enforcement powers into law that expedited the closure of unlicensed storefronts and, as a result, bolstered our legal market, " Hochul said in a statement.
James Morley III ✉
James Morley III is a writer with more than two decades of experience in entertainment, travel, technology, and science and nature.
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