State Cannabis Officials Repeatedly Raised Alarms to Hochul’s Team Over Private Equity Loan Deal, Internal Emails Show
Staffers red-flagged inflated costs and default risks for startup retailers — but were largely ignored by top officials under pressure to get financing flowing.
Last June, Joseph Thomas, an assistant counsel to Gov. Kathy Hochul, wrapped up negotiations on a $150 million deal that made investment firm Chicago Atlantic Group the major financier of the state’s cannabis legalization program.
Within the state’s Office of Cannabis Management, doubts about the agreement flared instantly and intensely.
“This is BAD,” wrote Matt Greenberg, a financial analyst at the cannabis agency, often referred to as OCM. “I would not advise them to sign this.”
Greenberg’s alarm was just one in a trove of more than 500 emails obtained by THE CITY that show agency officials repeatedly criticized many of the decisions that have shaped the troubled cannabis legalization program as they were being made.
In this instance, according to a state official with direct knowledge of the negotiations, top administration leaders agreed that the contract contained so many provisions benefiting the company at the state’s expense that it amounted to a sweetheart deal.
Nonetheless, after almost a year of failing to strike a better agreement with numerous other companies, Hochul’s top staff decided that the deal with Chicago Atlantic was the only way to fulfill a pledge, made by the governor in her 2022 State of the State agenda, to create a massive loan program through which New York State would allow people affected by years of racially discriminatory drug laws to flourish as owners of legal cannabis stores. [Read More @ The City]
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