Social Equity Cannabis Licenses Empower Ex-Offenders
False Assumption: Preferential cannabis retail licenses and funding for people previously prosecuted for marijuana offenses will create successful flagship businesses and recompense historical wrongs from the drug war.
Written by FARAgent on February 11, 2026
New York legalized recreational cannabis in 2021. State officials sought to help people of color and small businesses compete by giving them a head-start through licenses reserved for those with prior marijuana convictions. Gov. Kathy Hochul pitched this as setting right historical wrongs, financed by a $200 million fund with state money and private investors providing turnkey storefronts, low-interest loans, and support for 150 dispensaries.
Regulators recruited business owners like Roland Conner, who had 1990s convictions for selling marijuana. They promised windfalls but delivered high-cost loans with terms stripping control over decisions like construction. Owners faced rushed openings, unexpected bills, and debt traps. Only 22 stores opened. Conner defaulted on his $1.9 million loan. Nine owners reported pressure into bad deals.
The program now faces a state inspector general investigation. Owners of six shops asked Hochul to shut it down and refinance debts. Sales hit $1 billion overall, but the equity fund derailed rollout and extracted value from intended beneficiaries instead of helping them.
People Involved
- In New York, Gov. Kathy Hochul took office and soon promoted the Cannabis Social Equity Investment Fund in her 2022 budget. She saw it as a way to correct harms from the drug war by granting ex-offenders priority in opening dispensaries. [1]
- Reuben McDaniel III, then leading the State Dormitory Authority, proposed the $200 million fund to support 150 such stores. He shaped the program's structure. [1]
- Roland Conner, who owned a gym and restaurant and had convictions from the 1990s for selling marijuana, emerged as the first licensee under this initiative. He opened his dispensary but later defaulted on a $1.9 million loan amid high costs and rushed preparations. [1]
▶ Supporting Quotes (3)
“Governor Hochul put the plan in her first budget in January 2022 as officials were still hammering out the details. She said its goal was “setting right historical wrongs.””— The Sailer Plan for marijuana retailers is not working out
“In 2023, Roland Conner became the first person with a criminal conviction to open a licensed cannabis dispensary in New York... Mr. Conner, who owns Smacked Village in Manhattan, said he racked up bills after the fund rushed him to open the store temporarily before it was renovated and before anyone knew the loan terms. He defaulted on his $1.9 million loan last year”— The Sailer Plan for marijuana retailers is not working out
“Reuben McDaniel III, then the head of the State Dormitory Authority, which oversees public construction projects, pitched a plan to underwrite the first 150 licensed dispensaries with $50 million of state money and $150 million raised from investors”— The Sailer Plan for marijuana retailers is not working out
Organizations Involved
New York state regulators played a central role in the equity program. They sought out ex-offenders for licenses and managed the Cannabis Social Equity Investment Fund. This setup pushed owners toward loans that often led to defaults. [1] The fund itself provided financing for 22 stores, but with steep terms that reduced owner control. Defaults followed, sparking an inspector general investigation. [1]
▶ Supporting Quotes (2)
“Retailers like Mr. Conner... were recruited by state regulators with the offer of a head-start reaping legalization’s windfall.”— The Sailer Plan for marijuana retailers is not working out
“Just 22 stores have opened, financed by loans that cost more than officials told borrowers to expect and that came with unusual terms stripping owners of control over key business decisions”— The Sailer Plan for marijuana retailers is not working out
The Foundation
The assumption took root in the idea that marijuana prosecutions had mainly hurt users, not sellers, making licenses a form of justice. Officials thought this justified aid to ex-offenders, even those like Conner who had dealt drugs. [1] It also relied on the notion that people with criminal records and little retail background could succeed with ready-made stores and affordable loans. This overlooked barriers from federal laws and their lack of experience against well-funded rivals. [1] Growing evidence suggests these foundations were flawed, though the view is not yet universal.
▶ Supporting Quotes (2)
“It’s widely believed by the left-of-center that dope consumers rather than dope dealers were heavily imprisoned. Nah …”— The Sailer Plan for marijuana retailers is not working out
“no other lenders would extend credit to people starting highly regulated businesses with limited retail experience, a criminal record and sometimes a negative credit rating.”— The Sailer Plan for marijuana retailers is not working out
How It Spread
Gov. Hochul wove the fund into her 2022 budget proposal. She presented it as a direct fix for drug war injustices. This framing gained traction and rallied support for giving ex-offenders first dibs on licenses. [1] The idea spread through political channels, increasingly recognized as overly optimistic by some observers.
▶ Supporting Quotes (1)
“Gov. Kathy Hochul had promised that the initiative... would provide 150 businesses with turnkey storefronts, low-interest loans and extensive support.”— The Sailer Plan for marijuana retailers is not working out
Resulting Policies
New York legalized recreational cannabis in 2021. The law set aside licenses and funding for those with past marijuana convictions. [1] In 2022, Hochul's budget enacted the Cannabis Social Equity Investment Fund with $200 million. It aimed to launch 150 dispensaries run by ex-offenders. [1] Growing evidence suggests this policy rested on shaky assumptions, leading to implementation troubles.
▶ Supporting Quotes (1)
“After New York legalized recreational cannabis in 2021, regulators sought to help people of color and small businesses compete with deep-pocketed companies”— The Sailer Plan for marijuana retailers is not working out
Harm Caused
The program managed to open just 22 stores out of the planned 150. Owners faced debt burdens, as seen in Conner's $1.9 million default. [1] This slowed the broader rollout of legal cannabis in the state. An inspector general launched a probe into the fund's operations. [1] Six owners, including Conner, wrote to Hochul demanding the program's end and loan relief. They cited higher-than-expected costs and pressure to open quickly. [1] Increasingly, these outcomes highlight the assumption's flaws, though debate continues.
▶ Supporting Quotes (2)
“In interviews, the owners of nine shops said they were pressured into a debt trap. Now, the state inspector general’s office is investigating the program”— The Sailer Plan for marijuana retailers is not working out
“Mr. Conner, 53, and the owners of five other businesses recently sent a letter asking the governor to shut down the program and to refinance their debts.”— The Sailer Plan for marijuana retailers is not working out
Downfall
Defaults on loans began piling up. Owners complained of coercive terms and undue pressure. [1] The failure to open most stores drew attention. Lawyers like Eric Olson publicly criticized the setup. [1] These issues prompted an inspector general investigation. Growing evidence suggests the assumption underpinning the program was misguided, exposing its weaknesses, even as some defenders persist.
▶ Supporting Quotes (1)
“the situation exposes how an experiment in reparations... not only failed but also helped derail the rollout of legal cannabis in New York.”— The Sailer Plan for marijuana retailers is not working out
Sources
- [1]