Here’s the introduction to the piece
Last June, Gov. Kathy Hochul announced that a much anticipated deal had finally been reached to fund a $200 million public-private fund that would finance cannabis dispensaries run by the people who have been the most impacted by the war on drugs.
“Today’s announcement reinforces New York’s commitment to building partnerships that benefit New Yorkers and setting right the wrongs of the past,” Hochul said at the time.
But an investigation by THE CITY — based on a cache of documents including a near-final, 84-page draft of the agreement, internal agency emails and financial projections — reveals that New York state instead signed off on a lopsided deal that undermines its commitment to social equity goals while guaranteeing substantial returns to its partner, private equity firm Chicago Atlantic Group.
The state’s own Office of Cannabis Management later questioned whether the fund had overstated the potential revenue and profit potential, internal documents from the agency revealed.
State officials reached the agreement after they failed to attract a private equity partner to invest in the fund as planned. Instead, Chicago Atlantic will loan the fund $50 million at a 15% interest rate, all of it guaranteed by the state should retailers default, the terms reviewed by THE CITY reveal. The loan is further secured by the leases of the dispensaries as well as a $10 million pool of cash that the state is responsible for replenishing and which Chicago Atlantic can draw from in the case of late payments.
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How Private Equity Trumped Social Equity in State Cannabis Deal
