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New York Issues 105 More Cannabis Licenses as Governor’s Office Accused of Ignoring Warnings Over $150m Finance Deal

New York’s Cannabis Control Board has issued 105 new adult-use licenses and legalized home cultivation amid an ongoing overhaul of the state’s cannabis regulators.

I came amid damning reports that Governor Kathy Hochul’s office ignored repeated warnings that a $150m private equity deal to fund the state’s CAURD programme ‘smacked of predatory lending’.

Yesterday, Hochul announced that the latest round of licenses for various cannabis businesses have been issued.

These included 25 cultivator licenses, 22 distributor licenses, 22 microbusiness licenses, 19 processor licenses and 17 retail dispensary lisenses, alongside 45 licenses that transitioned from AUCC or AUCPs.

According to the CCB, 55% of these new licenses were issued under the Social and Economic Equity (SEE) program.

This brings the total number of licenses issued to 654 so far in 2024, with 132 legal dispensaries now operating in the state.

By early June, the CCB forecasts that legal adult-use sales in the state will surpass $200m, after seeing sales rise to $46.2m in May.

Additionally, the CCB approved regulations for the personal home cultivation of cannabis, allowing adults aged 21 and older to grow up to six plants individually, with a maximum of 12 plants per household.

The latest developments come as the state’s cannabis regulators are being overhauled at the behest of Hochul, who recently called the program’s rollout a ‘disaster’.

Earlier this week, three new key appointments, including an interim leader for the Office of Cannabis Management, were made following a damning review into the organization and the early departure of its previous leader, Chris Alexander.

However, new reports suggest Hochul’s office also played a part in the troubled rollout of its adult-use project.

According to The City, which obtained a swathe of internal OCM emails, allege that state officials ignored attempts from the regulatory body to ward them off of an unfavourable finance deal.

Last June, New York’s Office of Cannabis Management (OCM) brokered a $150 million deal with the Chicago Atlantic Group to finance the state’s cannabis legalization program. The agreement immediately sparked concerns within OCM due to terms that heavily favored the investment firm.

Despite efforts to negotiate better terms with other companies, Governor Kathy Hochul’s administration reportedly proceeded with the deal to fulfill a commitment to support those affected by racially discriminatory drug laws.

Internal communications are understood to have revealed intense criticism from OCM officials regarding various decisions shaping the program, particularly the public-private investment fund arrangement. The deal’s details suggested predatory lending, with high costs and stringent repayment terms threatening the viability of dispensary operators. The state guaranteed Chicago Atlantic a 15% return, making it a low-risk investment for the firm.

OCM’s warnings were apparently often ignored by the governor’s office, which later criticized the cannabis rollout’s failures despite being informed of the issues. Between July 2022 and July 2023, the program struggled to open enough legal dispensaries, causing significant financial losses as licensed cannabis rotted without a retail distribution system.

Key points of contention included high construction costs, inflated real estate prices, and the restrictive nature of the fund, which mandated using state-approved contractors. By April 2023, OCM officials were alarmed at the financial burden on licensees and the lack of transparency and efficiency in the process.

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