Report: New York State Cannabis Fund Managers Have Conflicts of Interest

This article has been updated to include a comment from DASNY.

New York’s vaunted $200 million fund to support social equity cannabis companies with real estate has an apparent ethics problem: The two individuals appointed to lead the fund are already in business with California-based marijuana company Cookies.

According to Syracuse.com, retired NBA star Chris Webber and entrepreneur Lavetta Willis were appointed in June to part of the team that will oversee the $200 million fund, which is being managed by the Dormitory Authority of the State of New York (DASNY). New York Gov. Kathy Hochul approved the appointments.

But what wasn’t noted before or after the pair was named to the management team was that they’re both already deeply involved in the industry, with a partnership struck last year with Cookies on a venture in Detroit.

In August this year, following the June appointments, Webber and Willis revealed that Cookies shops in Michigan will also be carrying cannabis products made by a company the pair own: Players Only.

“In short, Webber and Willis are tasked with raising funds for dispensaries that will compete with their own financial interests if Cookies gets a license to sell recreational marijuana in New York,” Syracuse.com reported.

DASNY spokesman Jeffrey Gordon defended the selection of Webber and Willis, and told Syracuse.com that the agency “has confirmed that the team is not engaged in business activities within the state of New York that would pose a conflict with the requirements of the state’s Cannabis program.”

Fund Status

The $200 million fund was to be paid for with $50 million in cannabis licensing fees, with another $150 million to be raised from philanthropic sources and “the private sector,” according to a May press release from DASNY.

But the agency called off its request for proposals for banking services to the industy. The RFP, which was originally issued Sept. 16 and had a due date of Oct. 21, was listed as “canceled” on DASNY’s website.

The original RFP had been looking for “qualified financial institutions operating in New York State interested in taking deposits from the Authority and furnishing the Authority with standard commercial banking services.”

Industry stakeholders told Green Market Report in recent weeks there’s been little news on how much progress has been made by fund managers in actually raising capital or getting state monies deposited, so that actual retail spaces can be leased for social equity cannabis companies.

When asked about why the RFP was canceled, a spokesperson for DASNY replied, “The fund will be selecting its own banking partner.”

Crystal Peoples-Stokes, majority leader for the New York State Assembly, was asked about the fund at the Business of Cannabis conference in New York – specifically whether it had met its goals.

She would only say, “We’re just going to keep going.”

Peoples-Stokes didn’t say how much had been raised or deployed, but she noted that they had focused on hiring a venture capital firm that was from a group that represented people of color.

The fund is not managed by the Office of Cannabis Management, according to Tremaine Wright, who leads the board.

“Even though DASNY has great intentions and the people on the OCM side know what they are doing, they should open the RFP,” said Mitch Baruchowitz, founder and manager of Merida Capital Holdings. “Find someone who can marry cannabis expertise to allocation capital expertise and then move forward from there. I think they can find big financial firms who would be willing to get invovled.”

Debra Borchardt contributed to this report.