NEW YORK — In an ambitious move to make its new marijuana industry equitable, New York is proposing a $200 million fund to help entrepreneurs of color and some other groups get into the business. But officials haven’t yet nailed down some components that experts say are crucial to making the investment effective.

Gov. Kathy Hochul’s proposal, unveiled last month, would be among the largest sums any state has committed to try to ensure diversity and social equity in the fast-growing legal pot business. The plan also is somewhat unusual for relying on money from private sources.

In one recent policy document, the Democratic governor’s administration vowed to create “the most diverse and inclusive” marijuana industry in the nation.

“New York will lead where many other states have fallen short,” it said.

Would-be equity applicants hope so. But they’re anxious for answers about who would provide private dollars and whether the money would help cover the costs of seeking a license, not just start-up expenses for people who can afford to secure one.

“Two hundred million dollars sounds great,” says Amber Littlejohn, the executive director of the Minority Cannabis Business Association, but “it’s really not so much the amount as it is the timing of the funding and services. And if that comes after the point of application, its ability to be impactful is really limited.”


Licensed sales are expected to launch sometime next year in New York, where adult recreational use of the drug was legalized last March.

New York’s equity program could give both grants and loans to eligible businesses, which would include those owned by women or minorities, struggling farmers, disabled veterans and people from communities that endured heavy pot policing.

Lawmakers and the governor’s office are negotiating about the proposed fund. Specifics are still in the works, said Chris Alexander, the executive director of the state Office of Cannabis Management.

“We want to make sure that these equity businesses have a chance to start the industry here, and and we’re very cognizant of the fact that they need these resources as early as possible,” he said.

He said the agency aims to limit application costs and documentation requirements as a way to make licensure accessible.

Charlotte Hanna remembers what it took to open her company’s Massachusetts dispensary, called Rebelle — consultants, lawyers, engineers, and tens of thousands of dollars in a down payment on a building. She covered the costs with money she’d made flipping houses, but she applauds New York’s fund as an “incredible” resource.


“It’s just a creative way that the state is looking at to help finance people that have had a hard time getting into the market,” says Hanna, CEO of Rebelle’s woman-and-minority-owned parent company, Community Growth Partners. It’s aiming to expand to Illinois, New Jersey and her home state of New York.

Recreational use of marijuana is now legal in a third of U.S. states and medical marijuana in nearly three-quarters.

Diversifying the marijuana business and improving opportunities for people who bore the brunt of the decades-long U.S. war on drugs has become a priority in some states as pot legalization created a new multibillion-dollar industry of predominantly white proprietors, executives and investors.

Social equity efforts range from licensing priorities to training to loans, but progress has been slow in many states.

“Access to capital is absolutely one of the biggest barriers to entry and barriers to success for minorities and women in the cannabis business,” says Tahir Johnson, the social equity and inclusion director at the Marijuana Policy Project, a pro-legalization group.

Opening a marijuana business can cost hundreds of thousands of dollars or more. As pot is federally illegal, many banks are unwilling to lend to sellers, growers and processors, and they’re ineligible for federal Small Business Administration-backed loans.


Many entrepreneurs begin by tapping personal funds, relatives, or friends — resources that aren’t equally available to all in a country with wealth gaps between women and men and between whites and people of color.

Social equity applicants qualify for license fees discounts in some states. Several offer grants or loans.

Washington state provides $1.7 million a year for grants. Connecticut has authorized borrowing up to $50 million for assistance including low-interest loans and capital. Some cities and counties, particularly in California, have their own initiatives; Los Angeles has given out $6 million in a year.

New York’s plan takes a page from Illinois, which is working with private lenders to make up to $34 million in loans.

The Empire State’s proposal so far envisions allocating $50 million — money the state would advance before collecting it from license fees and taxes — and looking to private investors for the rest, with a private partner helping to manage the effort, said Alexander, the cannabis agency director.

The state Dormitory Authority, a construction agency, could help social equity businesses line up and build out locations.

“We’re trying to identify all the things that people needed and they didn’t have in other states,” Alexander said.

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