Cannabis Dispensary Operators Demand Loan Forgiveness from Governor Kathy Hochul
A group of cannabis dispensary operators has called on Governor Kathy Hochul to forgive tens of millions of dollars of high-cost loans that they claim threaten the viability of their businesses. The loans were made by a social equity loan fund created by the Hochul administration to provide capital to dispensary owners, but the operators say it has instead perpetuated economic inequities.
The social equity loan fund was designed to provide capital to dispensary owners who were disproportionately affected by the state’s former, racially discriminatory drug laws. However, the operators claim that the fund’s high-interest rates and strict terms have made it difficult for them to make their monthly payments, and that they are being driven out of business.
One example cited by the operators is Roland Conner, who signed a $1.9 million loan with a 13% interest rate. He had trouble making the monthly payments within a year, and the loan is now in default. Conner is not alone, as many of the dispensary owners who received loans from the fund are struggling to make ends meet.
The operators are demanding that the governor forgive the loans or convert them to grants, arguing that they were predatory and unfair. They also point to the fund’s failure to attract private investors and its limited scope, which has resulted in only a fraction of the planned number of stores being opened.
Instead, the operators are calling for the state to adopt a program based on the Illinois model, which made nearly $9 million in forgivable loans available to social equity cannabis licensees in 2022. This approach would provide non-recourse loans, which would not be personal liabilities for the borrowers, and would also offer more flexible repayment terms.
Conclusion
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The cannabis dispensary operators are urging Governor Hochul to take immediate action to address the financial challenges faced by dispensary owners. By forgiving or converting the loans, the governor can help restore the viability of these businesses and promote further economic growth in the industry.
Frequently Asked Questions
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Q: Why are the dispensary operators demanding loan forgiveness?
A: The operators claim that the high-interest rates and strict terms of the loans have made it difficult for them to make their monthly payments, and that they are being driven out of business.
Q: What is the Illinois model that the operators are advocating for?
A: The Illinois model provides non-recourse loans with forgivable terms, which would not be personal liabilities for the borrowers and would offer more flexible repayment terms.
Q: How many dispensaries have opened with the assistance of the social equity loan fund?
A: According to a late draft version of the Chicago Atlantic loan agreement reviewed by THE CITY, 21 fund-backed stores have opened with the assistance of tens of millions of dollars in loans.
Q: What is the total amount of the social equity loan fund?
A: The fund includes $50 million of state funds and another $28 million in loans from Chicago Atlantic, a private investor.
