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The leader of New York State’s Dormitory Authority (DASNY) told state senators on Monday that much of the agency’s problems related to standing up the adult-use cannabis market stem from court injunctions and the reality of fundraising in the cannabis ecosystem.
“This is a new industry, governed by a new agency, and we have a new concept with our investment structure, and a new public-private partnership,” said DASNY Vice President Charlie Williams.
“It’s not an easy process,” Williams said.
DASNY has played a major role in New York’s legal weed rollout as a financier and project manager over the state’s Conditional Adult-Use Retail Dispensary program: It was tasked with finding a manager for the state’s $200M social equity fund, finding and enlisting contractors to build retail outlets, and securing a bank and point-of-sale system for retailers, along with other duties.
However, the agency has faced intense criticism from both licensees and industry experts over how it has handled its role, as well as its lack of transparency around the entire process.
Williams spoke Monday during a bipartisan hearing that included Senators Jeremy Cooney, Liz Krueger, Michelle Hinchey, James Skoufis, George Borrello, Pamela Helming, Nathalia Fernandez, and five others. The hearing comes amid cascading problems in the Empire State’s legal cannabis industry – which have left hundreds of farmers with two harvests’ worth of cannabis but few retail outlets to which they can sell their products, and hundreds of retail licensees unable to open their doors due to a court injunction stemming from a predictable lawsuit.
There wasn’t much new information that came from Williams’ testimony. He did say the social equity fund’s interest rate is 13%, which he described as “a highly advantaged product,” and said the state has spent “about” $25 million of the total $200 million fund, with “another five to 10 million to come.”
Williams also said DASNY has signed “24 or 26 leases at this point.”
DASNY was created in 1944 by Gov. Thomas Dewey to finance and construct dormitories. Then, 20 years later, hospitals and nursing schools. SUNY projects came about in the 1980s, and DASNY became a billion-dollar-a-year agency in the early 2000s.
In 2022, the agency “completed 16 bond financings valued at approximately $9 billion and managed a portfolio of more than 1000 construction projects, also totaling approximately $9 billion.”
Reuben McDaniel led the agency as CEO from late-2019 until earlier this month. McDaniel also held a seat on the state’s five-member Cannabis Control Board, and faced harsh criticism over the summer related to his dual roles. In June, he abruptly left the stage during a meeting with CAURD licensees and applicants in New York City.
“This is my question: What does transparency mean to DASNY,” said Carson Grant, a licensed CAURD operator, during the June meeting with McDaniels and the Office of Cannabis Management’s Chris Alexander in Queens.
“Everything about the onboarding process has been very unprofessional,” Grant said. “I haven’t seen anything in writing other than a lease – just empty promises, ignored emails, while claiming transparency.”
During Monday’s Senate hearing, Williams repeatedly talked about the lawsuits that have prevented OCM from processing CAURD licenses, and the cascading effect that has had on DASNY.
“The injunction prohibits the OCM from taking actions on behalf of CAURD,” Williams said.
”The fund can only serve CAURD licensees. So the moneys from this fund can only go to CAURD licensees. They’re currently injuncted. DASNY … and the fund are prepared to move forward as soon as it’s lifted.”