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New York spending $200 million on marijuana social equity properties

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New York is set to inject $ 200 million Lease to the local marijuana real estate market Up to 150 commercial facilities It will be given to social equity projects to step into them in the state’s new recreation market.

This move is considered the first in the US cannabis industry and, if successful, could provide a roadmap for other states to develop social justice programs.

At least one brokerage firm, the CBRE Group Already a reconnaissance place A spokesperson for DASNY, the agency that oversees the payment of funds on behalf of the New York State Dormitory Authority (DASNY), MJBizDaily..

A representative of CBRE said, “We are looking for a good retailer across the state. Municipality opt-in To allow retail pharmacies, “said spokesman Jeffrey Gordon.

The securities company declined to comment.

Spillover effect

DASNY said no rental contracts for social equity companies have been signed, but industry insiders say the government’s entry into marijuana real estate has had a spillover effect on other businesses, especially small businesses. ing.

“They are there. New York City Katz & Associates real estate broker Donnie Moskovich said of CBRE’s agents.

Moskovic is working with Cresco Labs, one of the state’s 10 existing medical marijuana licensees, to expand the retail footprint of Chicago-based multi-state operators in anticipation of launching an adult market. I am.

Moskovich said there was “enthusiasm” in the New York real estate market this year as entrepreneurs are preparing for a recreational market that could occur later this year.

“They are everywhere. They are looking everywhere,” Moskovich said when asked where CBRE was looking for a retail store.

He said CBRE is almost certainly already in every municipality Haven’t opted out yet Of legal cannabis sales, not only in New York City, but also in the north.

“When you talk to their broker, they tell you that out of $ 200 million, the fund sitting there already has $ 50 million and they are executing the transaction.”

Real estate support for social equity applicants praises New York’s progressive approach To promote diversity Increase business opportunities for those affected by the war on drugs.

But it also raised concerns among local entrepreneurs and real estate brokers. Some argue that real estate agents working on behalf of the state may increase the competition and price of small businesses looking for retail properties.

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Colby Piper, a New Jersey-based real estate broker specializing in marijuana, said:

Piper, who is looking for a place for customers who want to launch an adult company in New York, said the state has not yet announced whether there will be a forced setback between retailers.

Forced setbacks make it difficult for his clients to conclude long-term leases.

In addition, landlords often prefer long-term contracts with the state to renting with private companies because the state is considered a more reliable tenant, Piper said.

As a result, Piper is trying to avoid where he heard the CBRE agent is scouting.

“Very quietly, knowing where the state is looking, you can tell (to the client):’This section can be crowded. Try the next block. We need to see, “Piper said.

Program details

According to Gordon of DASNY, state funding has not yet been allocated and no $ 200 million manager has been elected.

He added that the request for proposal (RFP) pair associated with the fund is proceeding as planned.

  • Select a location and select a company to sign the tenant agreement – ​​Must be completed by June 20th.
  • Choose a construction company to oversee construction at the rented site – chosen on July 11th.

Gordon also confirmed that the money is being spent only on retail locations, not on cultivators or other sectors.

The property is leased for 10 years and is never actually purchased in the pipeline.

Gordon writes that DASNY’s goal is to open its first social equity retailer by the end of the year and identify all 150 locations by the end of the second quarter of 2023.

Unanswered questions

With a budget of just $ 200 million, some questions remain, such as how successful DASNY will be in trying to block 150 retail stores in New York for 10 years.

According to a news release on May 13, $ 200 million comes from “licenses and revenues from the adult cannabis industry, and up to $ 150 million from the private sector,” not from the state’s general fund. It is about.

“Depending on how they negotiate these deals, and when the actual rent is triggered, it may be possible to rent 150 places,” Piper said.

“But if the rent is triggered in the first or second month and you pay the rent before the application is created or the application window opens, the money will burn out quickly.”

Many retailers owe as much as $ 45,000 a month, Piper points out as a fictitious example.

“If you’re paying $ 45,000 a month, you can’t offer many places,” says Piper.

Stakeholders also lack clarity in the licensing process and general social equity programs.

So far, the state has not announced how many adult licenses will be issued, but regulators say half of the permits are reserved for applicants for social justice.

Also, it is unknown when the license window will open for either social equity companies or non-social equity businesses.

In addition, many entrepreneurs are waiting Final state marijuana industry regulation.

Many believe that a solid plan cannot be made without first knowing the regulatory framework, Piper said.

“They are writing the rules little by little,” Piper said.

“People trying to secure space (for marijuana business) … without regulation, risk-averse strategies can’t anticipate the game,” he said.

“If you’re looking at five spaces with an operator and a registrant comes out and says you need to be 1000 feet away from the church, you probably don’t have those five places there. I don’t know. “

But Moskovich added that the real estate market in New York was big enough that the efforts of DASNY and CBRE did not cause much turmoil for deal makers like him. He also predicted that it wouldn’t be a problem for large companies.

Rather, it is likely to be more of a problem for small businesses looking for a suitable retail space for social equity start-ups, Moskovich said.

In contrast, Moskovic has not encountered any major problems that help Cresco Labs find real estate for expansion plans.

“After all, there’s a lot of real estate out there,” Moskovich said.

John Schroyer can be reached at [email protected]..

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