EDITOR’S NOTE: NJ Cannabis Insider is co-hosting a Cannabis Career Fair & Business Expo on April 5 at Stockton University. (Students free.) Tickets here.
As New York races to open its adult cannabis market, its governor has proposed what social equity advocates are calling a bold and innovative way to get a truly diverse pool of applicants in the new marijuana industry.
In her Jan. 5 inaugural State of the State Address, Gov. Kathy Hochul proposed a $200 million social equity fund in the state’s $216.3 billion fiscal year budget, which has yet to be hammered out as the state missed its Friday deadline. New York lawmakers are expected to reconvene on Monday in Albany.
The $200 million fund to be backed by state and private dollars is intended to help entrepreneurs of color and other under-represented groups get into the business.
While the idea is short on details, Hochul and supporters say the fund is to get capital to those who need it most since cost of applying is a real barrier to entry.
It’s prompted some lawyers who represent smaller marijuana operators and wealthy investors to ask: Why not a social equity fund in New Jersey?
Jeff Brown, executive director of the state Cannabis Regulatory Commission, said he found New York’s idea “interesting,” but could not point to a similar big-dollar proposal to ensure diversity and inclusivity in the nascent industry in New Jersey.
“The CRC threaded equity and inclusivity through every part of the rules we wrote for the recreational cannabis market and we know that financing is an additional piece of ensuring the market is accessible,” Brown said in an email to NJ Cannabis Insider. “We have been working with other state agencies to identify access to capital, workforce development assistance, and business development resources for aspiring entrepreneurs and expect to have new initiatives in the future.”
The CRC last week approved 68 cultivators and manufacturers for conditional licenses as a social equity measure to give the smaller operations a piece of what is expected to be a multi-billion dollar industry alongside multi-state operators and well-heeled investors.
“These are the first businesses to get a foot forward in the state of New Jersey,” Brown said at the meeting. “I cannot stress that enough.”
That action was overshadowed by the board’s unexpected delay in approving eight medical marijuana dispensaries’ applications to also sell recreational weed this spring, which spurred Senate President Nicholas Scutari, D-Union, to announce he would hold oversight hearings over the CRC’s performance. The 68 smaller operators aren’t expected to be in a position to sell weed until late fall at the earliest.
At the meeting, Brown also noted that the New Jersey Economic Development Authority is working to help ensure a diverse pool of applicants.
“Additionally, we hope that municipal leaders, property owners, and others who stand to benefit from a thriving cannabis market will choose to invest in new businesses by not setting up financial obstacles for entrepreneurs,” said Brown.
The governor’s office acknowledged there was no social equity set-aside akin to New York’s proposal in Gov. Phil Murphy’s proposed $48.9 billion budget, which would kick in on July 1.
“Our administration has always strived to eliminate barriers to entry for the adult-use recreational cannabis marketplace, through low fees, priority application review for licenses for micro-businesses, impact zone businesses, and social equity businesses, and the option to apply for a conditional license,” said Murphy spokesman Michael Zhadanovsky to NJ Cannabis Insider.
“The governor and the CRC are committed to working with advocates and stakeholders to ensure a marketplace that works for everyone. The administration is always open to hearing new ideas for equity in the marketplace,” added Zhadandovsky..
Murphy has said minor marijuana convictions did irreparable harm to Black and brown communities, whose members were sent to jail by the nation’s failed War on Drugs. The governor said the primary goal of the legalization of cannabis and its sale in a legit market is to fund restorative justice programs.
After signing the cannabis bill last year, Murphy touted that New Jersey’s cannabis market would be one of the most inclusive in the country, welcoming everyone from mom-and-pop operations to larger concerns, and giving preference to minority- and women-owned businesses.
New York’s social equity fund received a mixed response from those closely watching New Jersey’s yet-to-open adult market.
“We’re not an apples to apples comparison in the regards of financing mechanisms,” said attorney Beau Huch, a former top aide to state Sen. Declan O’Scanlon, R-Monmouth,…
Read More: N.Y. proposes $200M social equity fund to help minority businesses sell weed.