New York promised marijuana social equity. Entrepreneurs got stuck with the bill.

Chris Kuilan (Courtesy photo)

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When New York lawmakers legalized adult-use cannabis in 2021 and promised the resulting billion-dollar industry would prioritize people harmed by marijuana prohibition, I believed it.

The Conditional Adult-Use Retail Dispensary program (known as CAURD) was supposed to give the first opportunity to run legal cannabis stores to New Yorkers with a cannabis conviction. For once, the people who paid the highest price during the war on drugs were supposed to be first in line.

I followed every rule. I filled out the paperwork. I waited through delay after delay. I did the training. I invested my own money. When the state created a $200 million Social Equity Cannabis Investment Fund through the Dormitory Authority of the State of New York (DASNY), we were told it would provide low interest loans to help secure locations and finance buildouts so we could actually open.

What many of us experienced instead was a structure we didn’t control and debt we’re now struggling to carry.

What went wrong with New York marijuana social equity?

In the end, the program was run by both DASNY and the financiers it brought on to invest in it: namely Chicago Atlantic, a commercial mortgage real-estate investment trust (REIT) and major industry lender. These types of firms make their money based on the spread between the funds they borrow and the dollars they loan. The higher the loan, the larger the spread, and the more they yield.

Under the DASNY program, buildouts were handled through state-approved vendors. Costs came in far higher than many of us expected. Timelines shifted. Decisions were made with little room for negotiation.

By the time some of us opened our doors, we weren’t just launching businesses — we were stepping into multi-million-dollar loan obligations in a market that had already become more competitive and more compressed more quickly than anyone predicted.

Every day I unlock the doors at Stoops, my store in Manhattan’s Flatiron District, and see what we built: a neighborhood shop where customers feel comfortable asking questions and a team that takes pride in educating people and doing things by the book.

We hire locally. We pay taxes. We follow compliance to the letter.

But behind that storefront is pressure.

The hard reality of social equity in New York cannabis

Cannabis prices have dropped. Legal shops are competing not only with each other but with an unlicensed, illicit market that still exists on almost every block years after the city and state promised a serious crackdown. At the same time, some CAURD licensees tied to the DASNY/Chicago Atlantic fund are carrying loan terms that don’t reflect the reality of the New York market.

We entered an industry that was supposed to create opportunity, and many of us are fighting just to stay afloat.

That isn’t how equity was sold to us.

Equity was described as a path to ownership; as a chance to build something lasting and turn previous harm into future opportunities. For many licensees in the DASNY/Chicago Atlantic structure, it has become a financial burden that is harming the very entrepreneurs the equity program was supposed to lift up.

That is why I’m standing with CAURD Inc., the Cannabis Association for Unified Retail Development, a member-driven organization formed by New York’s first CAURD licensees. Too many of us were having the same conversations in private — about inflated buildout costs, rigid contracts, and limited flexibility.

Instead of complaining separately, we decided to organize.

How New York cannabis social equity can be fixed

We’re not anti-regulation and we’re not anti-state. We’re asking for repair.

• That means serious loan restructuring or forgiveness for equity operators whose state-backed buildout loans were structured around assumptions about the New York market that never came to fruition.
• It means transparency around how certain buildout costs and loan interest were determined.
• It means giving licensees the freedom to choose vendors and operate with the flexibility real business owners need, along with access to working capital so legal shops can compete fairly.

Most of all, it means acknowledging that if the program didn’t work as designed, the burden should not fall entirely on the small operators who already had their lives upturned by the state’s decades long enforcement of prohibition.

We kept our end of the deal. We followed the rules. We opened stores, hired employees and created economic activity where legalization was supposed to make a difference.

The promise of cannabis legalization in New York was about restorative justice and meaningful opportunity.

Now New York can repair and reset the most ambitious cannabis legalization effort in the country while ensuring the entrepreneurs who answered its original call are not the ones left behind.

Chris Kuilan is the founder of Stoops NYC, a Manhattan-based, social equity cannabis dispensary. A lifelong New Yorker, Chris transitioned from the legacy market to the regulated industry, building Stoops with a focus on access, community, and doing things the right way