Cannabis Bonds Can Solve New York’s Billion-Dollar Social Equity Problem (Op-Ed)
By Ari Hoffnung, CEO of Bridge West Consulting
“It’s time to leverage our financial expertise to enhance social and economic equity throughout our state for today’s entrepreneurs and those that will follow.”
Diversity and access to capital are the most significant policy challenges facing New York’s adult-use cannabis market. The Marijuana Regulation and Tax Act (MRTA), along with Governor Kathy Hochul’s (D) newly announced Seeding Opportunity Initiative, takes steps to address both of these issues. Specifically, MRTA establishes an ambitious goal of awarding 50 percent of all adult-use licenses to social and economic equity applicants and commits to support these businesses with loans, priority licensing and other means such as incubator programs.
Notwithstanding these groundbreaking commitments, New York’s social and economic equity entrepreneurs will collectively require more than $1 billion of startup capital. To be clear, the $1 billion price tag is a conservative estimate. Launching a cannabis business is an expensive endeavor. In fact, opening a dispensary requires somewhere between $1-2 million; launching and operating an indoor cultivation facility (with 5,000 square feet of flowering canopy) requires around $5 million in capital. Assuming the state awards 250 to 500 dispensary licenses and 100 to 200 cultivation licenses to social equity applicants, it’s easy to see how the aggregate capital requirement will exceed $1 billion.