The managers of a New York state fund that took public money to help “justice-involved individuals” start cannabis businesses paid out to themselves over $1 million while the fund floundered at its goal, according to The City Thursday.
Social Equity Impact Ventures took around $1.7 million in payouts in the last 12 months despite falling short of their goal to help 150 people open stores, only starting 21 locations in two and a half years while missing fundraising targets, according to documents obtained by The City. The program, which has taken $50 million in public funding and $150 million in private equity, is designed to help individuals who had previously come into trouble with the state’s cannabis laws before it was legalized start their own cannabis businesses, according to the Dormitory Authority of the State of New York (DANSY).
The state holds a 49% stake in the fund in addition to the capital commitment, according to The City.
The three members of the management group included former New York City comptroller and Democratic mayoral candidate Bill Thompson, former NBA star Chris Webber and former Los Angeles sneaker entrepreneur Lavetta Willis, according to The City. It is estimated that the managers could earn approximately $15 million more over a decade if no changes are made to funding or investments in new shops.
The payouts were sourced from a 2% annual fee on contributions to the fund, according to The City.
The fund has been heavily criticized since it’s inception, as emails obtained by The City reveal that Matthew Greenberg, a former financial analyst at the Office of Cannabis Management, said the 2% fee “will completely deplete the $50 million” contributed to the fund by the state over a decade.
“Social Equity Impact Ventures is capturing a good chunk of capital from the fund — money that could’ve gone to supporting more social equity businesses,” Co-founder of cannabis consulting firm CannDelta Lucas McCann told The City. “Instead it’s going right back into their own pockets.”
A promise from the fund in January 2023 to hand out $800,000 to $1.2 million loans to businesses at a 10% interest rate was never formally offered in writing, with the fund instead jacking the rate up to 13%, according to The City. After failing to raise any money from investors by a September 2022 deadline, they instead took $150 million in loans from private equity firms.
“They never did what they sought out to do, so why are they getting paid at all?” McCann told The City.
Hochul’s office and DANSY did not immediately respond to the Daily Caller News Foundation’s request for comment.
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