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Hashish dispensary licensees in New York compete towards state company for actual property

On the finish of final 12 months, New York’s Workplace of Hashish Administration reversed a requirement for the state’s first-round of retail dispensary operators to make use of state-secured property, and introduced they may discover and use their very own actual property.

Nevertheless, some attorneys representing these enterprise homeowners are involved their shoppers should now compete towards a state company for these areas.

David Feder, a lawyer who makes a speciality of hashish and actual property, instructed NY Hashish Insider that he lately approached an NYC actual property dealer to inquire a couple of retail house in a fascinating location on behalf of a consumer licensed below the Conditional Grownup-Use Retail Dispensary program.

“They stated, ‘we’re already in talks with [the Dormitory Authority of the State of New York] on this property … so it is best to know that we’re already talking to them about it,’” Feder stated.

“They didn’t flip me away,” Feder stated. “Actually, they’re inviting us to take part in virtually what looks like a bidding conflict towards DASNY.”

Lengthy earlier than CAURD dispensaries began opening, hashish trade stakeholders have been nervous about an actual property crunch – particularly for retailers, and particularly in densely-packed New York Metropolis. Nevertheless, the dynamic rising is that of small enterprise homeowners being pitted towards DASNY – an enormous authorities establishment that issued greater than $10.6 billion in bonds within the 2021 fiscal 12 months.

An OCM spokesperson instructed NY Hashish Insider in an e mail that the company obtained discover of potential or proposed areas from CAURD licensees and managers of the social fairness fund overseen by DASNY.

“OCM receives discover of potential or proposed areas from the Fund and from CAURD licensees. For the needs of the distancing necessities between areas, OCM measures every new proposed location towards potential and lively areas already in our system,” OCM stated. ”Whereas it’s doable that CAURD provisional licensees might also determine the identical areas the place the SESC and the Fund have been negotiating leases, all areas are added to our system within the order they’re obtained.”

Feder, who stated he hasn’t contacted both company in regards to the matter, isn’t positive whether or not his consumer will transfer ahead pursuing the property, as outbidding a big company like DASNY can be tough – particularly when guidelines within the MRTA and regulatons proposed by OCM severely restrict the areas the place CAURD licensees are allowed to function their companies.

“Not solely are they competing with the opposite CAURD awardees within the area, they’re additionally competing with DASNY now; which is a really unnerving prospect,” Feder stated.

Paula Collins, an legal professional and accountant who represents hashish shoppers, stated none of her shoppers have confronted a state of affairs the place they’re competing towards DASNY for an area, however wasn’t shocked that the problem has arisen. DASNY had already been scouting and negotiating for properties for months when the Hashish Management Board began issuing CAURD licenses late final 12 months.

In instances the place landlords or actual property brokers are fielding affords by particular person CAURD companies and DASNY, the small enterprise proprietor is at an apparent drawback, Collins stated.

“If I put myself within the place of a industrial landlord, I’d go together with the DASNY contract earlier than I went with the person,” Collins stated. It’s possible industrial landlords “would need the safety of a state contract over a person, particularly a CAURD licensee – who could or could not have nice credit score, or could or could not have a variety of capital.”

New York’s hashish actual property crunch is particularly acute downstate within the larger New York Metropolis metro space, stated Matt Leonardo, an legal professional who represents a number of CAURD licensees and entrepreneurs who intend to use for basic licenses.

Landlords who’re prepared to do enterprise with hashish shoppers are acutely aware of state regulation that prohibits dispensaries from opening inside 500 toes of a faculty or 200 toes of a home of worship, they usually’re leveraging the state of affairs, Leonardo stated.

“It’s been actually tough to discover a house that satisfies necessities with a prepared landlord,” Leonardo stated. “The landlords are simply enjoying excessive hardball: a variety of situations, some huge cash upfront.”

Moreover, the OCM has proposed laws that may bar dispensaries from opening inside a 1,000-foot radius of one other weed retailer in communities with greater than 20,000 residents – or a 2,000-foot radius in communities with fewer residents.

Nevertheless, an OCM spokesperson beforehand instructed NY Hashish Insider that the company is at present reviewing and revising proposed laws – which haven’t been totally authorized – primarily based on public feedback, and that the proposed guidelines embody a mechanism for the CCB to override the buffer, “if it was decided it was within the public comfort and benefit to take action.”

Competitors with DASNY exacerbates current difficulties for CAURD licensees, who’re very possible much less savvy at negotiating a property deal than the Dormitory Authority, which boasts a workers of consultants with deep connections within the Empire State’s actual property neighborhood, Leonardo stated.

Nevertheless, he added that it’s not notably shocking that this specific difficulty has emerged, because the state arrange the CAURD program in a method that required licensees to make use of DASNY areas, after which later deserted that requirement.

“That is virtually a pure consequence of establishing this system the way in which they did,” Leonardo stated.

This story has been up to date to incorporate the Workplace of Hashish Administration’s response.


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