NY is offering a $200 million social equity fund to help minority businesses sell weed. What about NJ?
As New York races to open up its adult cannabis market, its governor has come up with what social equity advocates call a bold and innovative way to secure a truly diverse pool of applicants in the new marijuana industry. .
In her January 5 State of the State Inaugural Address, Governor Kathy Hochul proposed a $200 million Social Equity Fund in the state’s $216.3 billion fiscal year budget. State, which has yet to be set as the State missed its Friday deadline. New York lawmakers are scheduled to meet again Monday in Albany.
The $200 million fund which will be supported by public and private funds is intended to help entrepreneurs of color and other underrepresented groups get started in business.
Although the idea lacks specifics, Hochul and his supporters say the fund aims to provide capital to those who need it most, as the cost of demand is a real barrier to entry.
This has prompted some lawyers who represent small marijuana growers and wealthy investors to ask: why not a social equity fund in New Jersey?
Jeff Brown, executive director of the state’s Cannabis Regulatory Commission, said he found the New York idea “interesting,” but couldn’t point to a similar big-dollar proposal to ensure diversity. and inclusiveness in New Jersey’s fledgling industry.
“CRC has built fairness and inclusivity into every part of the rules we’ve written for the recreational cannabis market and we know that funding is an additional element to ensuring market accessibility,” Brown said in an email to NJ Cannabis Insider. “We have worked with other state agencies to identify access to capital, workforce development assistance and business development resources for budding entrepreneurs and expect to have new initiatives in the future.”
Last week, the CRC approved 68 growers and manufacturers for conditional licensing as a social fairness measure to give small farms a slice of what is expected to be a multi-billion dollar industry alongside multi-operators. -States and well-heeled investors.
“These are the first companies to get a foothold in the state of New Jersey,” Brown said at the meeting. “I cannot insist on this point.”
That action was overshadowed by the board’s unexpected delay in approving applications from eight medical marijuana dispensaries to also sell recreational weed this spring, prompting Senate Speaker Nicholas Scutari, D- Union, to announce that it would hold monitoring hearings on the performance of the CRC. The 68 small operators shouldn’t be able to sell weed until late fall at the earliest.
During the meeting, Brown also noted that the New Jersey Economic Development Authority is working to help ensure a diverse pool of applicants.
“Furthermore, we hope that municipal leaders, landowners and others who stand to benefit from a thriving cannabis market will choose to invest in new businesses by not creating financial barriers for entrepreneurs,” said Brown said.
The governor’s office has acknowledged that there is no social equity set aside like New York’s proposal in Governor Phil Murphy’s proposed $48.9 billion budget, which would take effect on 1 July.
“Our administration has always worked to remove barriers to entry into the adult recreational cannabis market, through low fees, priority review of license applications for micro-enterprises, corporate impact zone and social equity ventures, and the ability to apply for a conditional license,” Murphy spokesperson Michael Zhadanovsky told NJ Cannabis Insider.
“The Governor and CRC are committed to working with advocates and stakeholders to ensure a market that works for everyone. The administration is always open to hearing new ideas for fairness in the market,” Zhadandovsky added.
Murphy said the minor marijuana convictions have caused irreparable harm to black and brown communities, whose members have been sent to prison by the country’s failed war on drugs. The governor said the main purpose of legalizing cannabis and selling it in a legitimate market is to fund restorative justice programs.
After signing the cannabis bill into law last year, Murphy touted that New Jersey’s cannabis market would be one of the most inclusive in the country, welcoming everyone from family operations to large corporations, and giving preference for minority and women-owned businesses. .
The New York Social Equity Fund has received a mixed response from those closely watching New Jersey’s still-open adult market.
“We’re not an apples-to-apples comparison when it comes to funding mechanisms,” said attorney Beau Huch, former senior aide to Sen. Declan O’Scanlon, R-Monmouth, who worked on both medical and recreational cannabis bills. . “Is the $200 million that New York has set aside in their general fund? Is it a loan? I really don’t know the answer to that question, but I know New Jersey is broke.
“We don’t have any money to give and it would be a heavy burden here even if we did,” added Huch.
Edmund DeVeaux, president of the New Jersey CannaBusiness Association business group, said it can’t just be about the money to ensure the success of minority and women-owned cannabis businesses.
“In our evolving regulatory and legislative arenas, the state has not only prioritized the communities most affected by unfair treatment under the law, but those who have already been convicted for cannabis and small start-up businesses. also have access to various forms of assistance through state sources like the Economic Development Authority, Business Action Center, and New Jersey Re-entry Corporation,” DeVeaux said in an email to NJ Cannabis Insider.
“It must be recognized that future and current participants in the cannabis industry may need to hone certain skills to be successful in the long term.”
But some in the Garden State say applicants need the financial aid more early in the application process.
New York plans to begin issuing licenses to sell recreational cannabis for adult use within the next year. Hochul’s $200 million social equity fund would be backed by public and private funds to provide capital and start-up support to disadvantaged applicants.
Hochul plans to allocate $50 million — money that New York would advance before collecting it on license fees and cannabis taxes — and look to private investors for the rest.
A private partner would manage the fund, which could provide both grants and loans to eligible businesses, which would include those owned by women or minorities, disabled veterans, and people from communities that have endured heavy enforcement. weed law. Details are still in preparation.
If that money is approved, New York could use some of it to help open cannabis businesses, including securing retail leases and home furnishing stores.
Clifton’s Nadir Pearson would like New Jersey to embrace this idea. The 25-year-old black entrepreneur said he could use the financial aid to apply for a conditional manufacturing license. So far, Pearson said he’s spent $13,000 on attorneys reviewing his conditional request. He expects $35,000 in additional fees to be converted into an annual license.
On top of that, Pearson is spending tens of thousands of dollars on a down payment on a 16,000 square foot warehouse in South Jersey. He secured the site in February, but with continued delays in the launch of the New Jersey adult recreational market, Pearson said he was paying $10,000 a month in rent for a property that is not yet generating revenue.
“Legislators should be a little more aware of the economic impact they’re going to have by passing these laws.” Pearson said. “There is a strong disconnect between understanding the actual cannabis trade and the intent of these laws.”
Like many entrepreneurs, Pearson tapped into personal funds, relatives and friends – to get his foot in the door. Her mother, Onika Perez, and another business partner, Hope Wiseman — a cannabis operator in Maryland — are listed as majority owners on the application for one of the women-owned business licenses. He holds a minority stake.
“Finding ways to alleviate some of these financial burdens should be a priority… wherever the state feels it can be best able to provide financial assistance — it should,” Pearson said.
“If true fairness was the benchmark we wanted to build this industry on, then they need to think long and hard about it.”
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Suzette Parmley can be attached to [email protected] or follow her on Twitter: @SuzParmley