New York City officials announced that they are seeking lenders to support an equity fund for marijuana, which will encourage participation in the industry of people who have been disproportionately affected by criminalization.
The New York City Economic Development Corporation posted on Tuesday a Request for Proposal (RFP), inviting lenders and an administrator to apply for the Cannabis NYC Loan Fund. This fund will offer low-cost funding to social equity applicants who are interested in entering the marijuana market.
Officials aim to raise between $20-30 million dollars for the fund. It was created in partnership with NYC Department of Small Business Services. This includes an initial injection of $8 million by the city. Total amount will depend on the response of private lenders to RFP.
Maria Torres Springer, Deputy Mayor of Housing, Economic Development and Workforce, said in a recent press release that to create a more equal economy, it is important to invest in every industry growing in the City. The City of New York has done exactly that with the Cannabis NYC Loan Fund. We are eager to partner up with other investors who wish to invest in an equitable cannabis sector that creates jobs and grows businesses.
The fund provides money to cannabis business owners who want to open up in the city at a lower price than the market.
The RFP states that “NYCEDC is committed to providing up to $8,000,000 of subordinated loans at a zero percent interest rate in order to attract private capital and leverage fund size, impact, as well as lowering overall interest rates for Loan Fund Borrowers.” The loans will be paired with technical assistance in order to maximize the chances of success for the borrower and reduce the risk of default.
The program has been structured to provide loans of up to $60,000 and $175,000, and up to $500,000.
The RFP states that “as soon as businesses achieve certain milestones, then they can apply for additional loans with increasing amounts.” To access larger loans in the future, businesses must meet certain operational milestones, and entrepreneurs need to fulfill related technical assistance requirements.
The fund will be able to “protect itself against losses” and allocate more money to companies with a greater chance of success, it states.
Last August, Mayor Eric Adams announced that the city’s Cannabis NY initiative was launched. The initiative is designed to support entrepreneurs who are most affected by the drug-war.
This involved the opening of an online application portal to allow people who have been criminalized for marijuana to be in line first for conditional adult-use retail licenses.
Andrew Kimball, President and CEO of NYCEDC, said that thanks to Mayor Adams’s leadership the NYCEDC has introduced an important tool for making the cannabis industry accessible and equitable by providing low-cost funding. The Cannabis NYC Loan Fund is a great way to cement New York City’s position as a leader in the cannabis industry.
He said that the fund was committed to boosting a new industry and uplifting New Yorkers who were underrepresented, especially those who had been unfairly affected by outdated cannabis policies. “We are looking forward to working with our partners, both in the public sector and private, to create a vibrant and inclusive economy that is globally competitive for all New Yorkers.”
Kevin Kim, Commissioner of NYC Department of Small Business Services, said that the fund is “an important step to ensure that City’s cannabis businesses have access to capital they need to flourish and to cement New York City as the cannabis industry’s capital of the World.”
Kim stated that by focusing the Loan Fund on businesses run by applicants who are socially and economically disadvantaged, it will not only help grow our businesses, but also address the inequalities created by decades’ worth of misguided cannabis policies.
Lenders are invited to submit their responses until September 7. NYCEDC will be hosting an in-person information session and a virtual one about the fund, on August 3.
Dasheeda D. Dawson, the founding director of Cannabis NYC, said: “I’m thrilled to be partnering with EDC in order to launch the Cannabis NYC Loan Fund.” Our efforts address one of the largest barriers to success for cannabis entrepreneurs, by providing much-needed financing that was sorely lacking. I am also extremely proud of my city for creating this Loan Fund within a record time of less than a calendar year after the launch of Cannabis NYC.
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In May, New York’s marijuana regulators announced that they were preparing to launch a pilot program allowing cannabis farmers markets. According to the state Office of Cannabis Management, marijuana farmers markets would help to meet consumer demand and allow growers to get their products to market legally. Reports indicate that, for the time being, this plan is on hold.
Gov. Gov.
launched a public awareness campaign in April to encourage adults to purchase marijuana from licensed stores to ensure the products are safe, and to use revenue to further equity and reinvestment objectives.
New York Senate also has a Committee that is solely focused on marijuana. This committee will work with regulators to help shape the cannabis market in New York.
In March, officials announced that they will double the number of adult-use cannabis licenses that are approved from 150 to 300. This was after certain applicants indicated that they could open their storefronts more quickly without any additional assistance through a program that is designed to assist eligible entities in creating physical locations.
As the state struggles with the regulation of the adult-use marijuana market, the governor recently introduced legislation that would increase enforcement authority in order to crackdown on illegal marijuana retailers.
Hochul unveiled separately in December a tool for verifying marijuana businesses and products. The plan is to place a QR code at licensed cannabis retailers, and to use a universal symbol on the label of authorized cannabis products.
She also signed, in late November , a bill aimed at expanding the hemp market of the state through collaborative partnerships that identify new opportunities for using the crop and derivatives it produces as packaging and construction materials.
Last month, the New York Senate approved a bill that would provide relief from taxation to New York City cannabis businesses who are currently prevented from claiming federal deductions due to an Internal Revenue Service code (IRS), known as 280E.
Although Hochul signed last year a budget bill that included provisions that allow state-level tax deductions for cannabis businesses — a partial remedy to an ongoing federal issue — New York City’s own tax laws were not affected by this change.
Photo by Mike Latimer.
The article New York City Seeks Private Lenders for New Marijuana Fund to Promote Industry Equity first appeared on Marijuana Moment.
