Was it Hochul’s SNAFU all the time?

Just when i thought the Massachusetts situation was as low as you could go on a Tuesday out comes this revelation by NY publication, The City.

Well done them for digging deep

Keywords / Phrases are

Deflection
Predatory Lending
“This is BAD”
Sweetheart Deal

My head hurts just reading this

Last June, Joseph Thomas, an assistant counsel to Gov. Kathy Hochul, wrapped up negotiations on a $150 million deal that made investment firm Chicago Atlantic Group the major financier of the state’s cannabis legalization program.

Within the state’s Office of Cannabis Management, doubts about the agreement flared instantly and intensely.

“This is BAD,” wrote Matt Greenberg, a financial analyst at the cannabis agency, often referred to as OCM. “I would not advise them to sign this.”

Greenberg’s alarm was just one in a trove of more than 500 emails obtained by THE CITY that show agency officials repeatedly criticized many of the decisions that have shaped the troubled cannabis legalization program as they were being made.

In this instance, according to a state official with direct knowledge of the negotiations, top administration leaders agreed that the contract contained so many provisions benefiting the company at the state’s expense that it amounted to a sweetheart deal.

Nonetheless, after almost a year of failing to strike a better agreement with numerous other companies, Hochul’s top staff decided that the deal with Chicago Atlantic was the only way to fulfill a pledge, made by the governor in her 2022 State of the State agenda, to create a massive loan program through which New York State would allow people affected by years of racially discriminatory drug laws to flourish as owners of legal cannabis stores.

After THE CITY unearthed a near-final copy of the undisclosed contract in April, several state legislators and financial experts said it smacked of predatory lending by loading startup retail operators with steep costs and strict repayment terms that could quickly lead them to default. The details of the agreement revealed that the state had guaranteed the company a 15% return on its investment even if dispensary owners failed — a nearly risk-free proposition.

When Hochul called the cannabis rollout a “disaster” this January, OCM officials were privately stunned, since their repeated warnings had often gone unheeded by the governor’s office.

The emails reviewed by THE CITY, along with policy memos and reports, cover the critical period between July 2022 to July 2023, when the state was struggling — and failing — to open more than a handful of legal dispensaries as hundreds of thousands of pounds of licensed cannabis rotted in fields and warehouses for lack of a retail distribution system.

Individuals whom the state chose as dispensary owners because they had been victimized by decades of now discredited drug laws found themselves facing high-interest loans, high construction costs and wildly optimistic official revenue projections they stood little chance of meeting.

Meanwhile, thousands of illegal weed stores proliferated around the city and state, largely with impunity.

Amid this disarray, officials from OCM, one of two state agencies tasked with managing the program, were sending out their increasingly urgent red-flag emails to each other and to others in state government. Frequently the focus was the public-private investment fund that Chicago Atlantic is participating in, where the state is contributing $50 million and the company has agreed to provide a $50 million loan and a commitment to spend up to $100 million on real estate that the fund would then lease to retail licensees.

In one representative email from May 26, 2023, James Rogers, the Office of Cannabis Management’s current director of business development, wrote to his colleagues that it might be time to blow the whistle on their partner in the legalization rollout, the state Dormitory Authority: “Inflated construction costs are real; Inflated real estate prices are real; binding licensees to vendors that were procured outside the state’s procurement procedures is real.”

“We must issue a statement that is truthful about how the program was run,” he urged.

The officials were never more alarmed than they were in emails to each other before they sent an annotated copy of the Chicago Atlantic agreement to Hochul’s executive chamber advocating extensive changes.

and that’s only the start, this is going to reverbarate for a long time to come

read on at