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Weed Retailers With Criminal Histories Were Promised a Head Start. Instead, They’re Stuck In Line.

In March Gov. Hochul announced New York was “making history” by putting people convicted of cannabis offenses first in line to legally sell pot products. Housing Works is now seizing the honor with a retail outlet opening Thursday.

December 30, 2022 Gabriel Poblete, The City
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Back in March, Gov. Kathy Hochul announced that people who’ve been impacted by a past cannabis-related criminal conviction would be the first to retail the substance legally in New York.

“New York State is making history, launching a first-of-its-kind approach to the cannabis industry that takes a major step forward in righting the wrongs of the past,” she said.

But the first state-approved pot dispensary set to open its doors Thursday will be run by a nonprofit organization, Housing Works — while 28 holders of coveted licenses allotted to entrepreneurs with criminal justice histories are caught in a bureaucratic holding pattern with the state.

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Housing Works, which helps people experiencing homelessness or HIV/AIDS and operates a chain of thrift stores and a used book store, will be retailing legal, grown-in-New York marijuana products at the corner of Broadway and 8th Street in Manhattan. Soon, the Doe Fund, another nonprofit, will open a few blocks north on Broadway. So long as a nonprofit has a board member once convicted of a cannabis-related offense or is a close relative of someone who was, the group could qualify for a license.

And illegal retail outlets are already proliferating.

Meanwhile the justice-involved sales licensees have been waiting for a green light to choose their locations. The state’s Office of Cannabis Management had told applicants they would have to sublease storefronts selected by the state Dormitory Authority. Then, in an about-face over two weeks ago, the state informed the retailers that they could choose their own locations to sublease, so long as the state okayed them.

The Office of Cannabis Management also switched up the retail rollout so that sellers could set up delivery services first, pending government approval of each warehouse location.

Since then, lawyers representing the new crop of proprietors say they have submitted location requests but heard nothing back from the state.

David Feder, whose firm WeedLaw helps applicants navigate New York’s licensing system, told THE CITY that one of his clients has yet to receive a response from the Dormitory Authority since submitting a location for delivery and another for dispensing in mid-December.

As THE CITY first reported, the Dormitory Authority disclosed earlier this month that its New York Social Equity Cannabis Investment Fund had signed its first retail lease, in Harlem across 125th Street from the Apollo Theater. But the state has not yet said which retailer will occupy that spot.

Feder said that another licensee he is working with was offered a choice between two other Manhattan locations leased by the state — but still has to wait for the state to let them know which of the four Manhattan license-holders will secure the first storefronts, depending on which scored highest during the license application process.

“Stuff is happening, and I think that it’s got potential. The only question is how do they execute?”

Feder told THE CITY. “Timing is everything in this. Because if they’re giving the nonprofits the first leg of this — yeah, they’re gonna capture more sales.”

Waiting to Sublet

Thursday’s soft launch of Housing Works Cannabis Co. will take place at 4:20, store manager Sasha Nutgent said.

She said opening the dispensary has “been a month in the making,” adding that Housing Works had had its eye on the spacious East Village corner storefront — long home to a Gap outlet — ever since the group was awarded the license. He said working with the Office of Cannabis Management has been smooth.

“They have been very hands on with us, If we ever had a question. All I had to do was send an email to the point person and they immediately responded,” Nutgent said. “It’s been really, really smooth,” Nutgent said.

The road to opening day has been bumpier for the formerly justice-involved retailers, who still have no timeline.

Public defender Eli Northrup has been helping the Bronx Cannabis Hub, a legal advisory project that is representing three licensees that’ll be based in the city. He says his clients have been caught between waiting for the Dormitory Authority to offer sites and seizing the newly offered opportunity to choose their own.

“People are confused on the timeline of when they might, if they don’t want to find their location,  when it might be identified for them,” said Northrup. “The toughest part for individuals is to make decisions based on not complete information.”

An example of the sign that will display on licensed cannabis shops in New York.
An example of the sign that will display on licensed cannabis shops in New York. | New York State Office of Cannabis Management

Potential locations are constrained under the state law, which forbids retail sales within 500 feet of a school and 200 feet of a house of worship.

To raise funds to build out the dispensaries, the state launched a $200 million New York Social Equity Cannabis Investment Fund. The Dormitory Authority awarded the management of the fund to Social Equity Impact Ventures LLC, whose team includes Former NBA player Chris Webber and entrepreneur Lavetta Willis.

That fund has not yet publicly disclosed any investments, and questions remain about how much it has actually raised, beyond a $50 million initial investment from the state that’ll be raised from licensing fees and revenue.

Feder shared on a LinkedIn post over a week ago that Dormitory Authority president and CEO Reuben McDaniel III has informed applicants that the authority has “secured enough funding to support 35-40” locations.

While the Office of Cannabis Management confirmed to THE CITY that it did hold a presentation along With DASNY, it did not confirm any of Feder’s claims in his post. request for comment about how much money the Cannabis Investment Fund has raised. Gordon could not confirm that DASNY had raised capital for the fund, saying in a statement that “announcements on progress of raising capital at appropriate times to ensure that negotiations for ongoing fund raising will not be impacted.”

Office of Cannabis Management press officer Trivette Knowles said the office would soon share more information with applicants on how they can work with the fund to propose locations for their dispensaries.

“Provisional licensees have been sent a form by the Office that they can use to request a site of their choosing, which will then be reviewed by OCM and DASNY,” Knowles said in a quote. “Provisional licensees with their own location who want access to support from the Social Equity Cannabis Investment Fund must work with the Fund to execute a lease that will be held by the Fund.”

A spokesperson for the Dormitory Authority, Jeffrey Gordon, said “The process of identifying sites is ongoing.” He said the Office of Cannabis Management will match licensees with locations once leases are finalized. He also noted that any entrepreneurs who go ahead and try to open operations “in a space not leased by the Fund will not get Fund resources.”

THE CITY is an independent, nonprofit news outlet dedicated to hard-hitting reporting that serves the people of New York.

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