Dec. 5, 2022 -- New York’s commitment to an equity-focused cannabis rollout appears to be in serious jeopardy.
Just the other week, the first batch of Conditional Adult-Use Retail Dispensary (CAURD) licenses were announced, with more to follow.
These CAURD licenses are going to people who were impacted by the so-called war on drugs, communities that other cannabis markets have largely marginalized.
The state has promised CAURD licensees support with real estate and banking services on behalf of the Dormitory Authority of the State of New York (DASNY).
However, the entire effort is reliant on a sizeable public-private $200 million fund, and now it looks like New York cannabis is in dire straits after perhaps backing the wrong investment firm to manage the fund.
In case you missed it, NY Cannabis Insider published a bombshell article last week about how Social Equity Impact Ventures – headed by NBA Hall-of-Famer Chris Webber and shoe entrepreneur Lavetta Willis – “have repeatedly failed to deliver on their biggest and boldest claims.”
DASNY selected Webber and Willis to manage the fund and raise $150 million from private investors, with the other $50 million coming out of state coffers.
Now it seems that the duo has missed the deadline to raise these private funds, and they are facing heavy scrutiny.
In fact, the recent NY Cannabis Insider article raises all sorts of red flags about Webber and Willis, including an apparent failure to follow through on a $100 million social equity fund and “cannabis compound” in Detroit, as well as other empty promises across the industry.
The article even digs up past episodes of financial mismanagement for both Webber and Willis.
Essentially, DASNY chose Webber and Willis to lead their fund based on a bunch of hype and hot air.
Granted, DASNY has not commented on how much of the $150 million has actually been raised. They’ve also withheld comment on their vetting and selection process.
Maybe Webber and Willis have successfully raised more than we realize, although if that were the case, it would be an outlier in their abysmal cannabis industry track record, and it wouldn’t make sense for DASNY to hide good news.
And even in the case of bad news, it’s probably not smart to hide that either.
How Did This Happen?
Reading through the NY Cannabis Insider article, it seems blatantly obvious that DASNY didn’t really do any vetting at all before partnering up with Social Equity Impact Ventures.
Maybe DASNY President Reuben McDaniel III was hyped about the idea of collaborating with a former NBA star in Chris Webber. Or maybe Webber and Willis came in with a pitch that was too good to deny. After all, the state’s social equity goals seemed to match the surface story behind Social Equity Impact Ventures.
Then again, what qualifies a government department like DASNY to even make big-money cannabis industry decisions?
DASNY has no cannabis industry acumen, and they’re probably not even qualified to run due diligence on any potential cannabis stakeholder.
The whole thing is a shit show from any angle you look at it.
Was This an Avoidable Mistake?
New York cannabis is supposed to be better than this. They were supposed to build on the mistakes of previous cannabis markets.
Instead, they’re repeating the mistake of piss-poor investment partner decisions, and apparently stumbling into entirely new mistakes as they strive to reinvent the wheel.
Yes, making sure minorities and war-on-drugs victims have a fair opportunity to participate in cannabis is critical.
However, maybe that looks like lowering the barriers to entry and treating cannabis more like other industries, despite the ongoing schedule I status at the federal level.
It’s time to start asking more questions on how New York is going about this.
Does it make sense to treat People of Color like charity cases and to promise them licenses and fundraising handouts?
No matter how you feel about that, it looks like this first wave of licensed retailers are about to face bitter disappointment and heartbreak.
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