Governor Kathy Hochul’s appointee to lead a state agency that helps New York’s legal cannabis retail stores get business loans faced tough questions from senators Tuesday. It’s the latest in a string of accusations of mismanagement surrounding the state’s troubled rollout of adult recreational marijuana.
The Dormitory Authority was originally formed to build housing for students at what were then state teacher colleges, but it has expanded its mission over the years. It is now, among other things, responsible for overseeing a private equity firm that offers loans to people who were awarded licenses to sell legal cannabis. Those loans are designated for New Yorkers harmed by the decades-long prohibition on marijuana either economically or through involvement in the criminal justice system.
But documents first highlighted in the digital news platform The City found that the firm, Chicago Atlantic, engaged in what could be considered predatory lending by setting high interest rates for building renovations and overcharging by as much as three times the actual cost of the construction.
Robert Rodriguez, Hochul's appointee to head the authority, faced questions about Chicago Atlantic and more during a Senate Finance Committee hearing.
Committee Chair Liz Krueger told Rodriguez, a former Assemblymember who previously served on the Dormitory Authority's board, that she was shocked about some of the accounts from the retail licensees.
“Some of the most disturbing things I have ever imagined coming out of a government-operated program,” Krueger said.
The state has already contributed $50 million to a $200 million fund meant to help facilitate the new legal cannabis stores.
The loan program has been temporarily suspended.
Rodriguez told Krueger and other senators who questioned him that he hopes to do better if he’s confirmed to lead the authority.
“There are certainly lessons to be learned,” said Rodriguez.
Senator Krueger, a longtime proponent of legalizing cannabis, asked Rodriguez why the Dormitory Authority has fallen so far short of its goals of opening 150 retail stores under its capital equity program.
“The original statement was that this was to deliver 150 stores,” said Krueger, who said just around two dozen have either opened or are slated to open soon.
“We haven't gotten very far,” she said.
Rodriguez says 24 new stores will be opened by June.
He blamed other factors for the delay, including the proliferation of illegal cannabis shops, which have sprung up in recent years as the state has been slow to add legal stores.
“This was going to be an opportunity to create flagship stores in sensitive locations to establish the legal market,” Rodriguez said. “And, and certainly, we're all seeing the difficulties and challenges around the marketplace, particularly as we're dealing with the illegal market that is just everywhere.”
The controversy also comes at a time when Governor Hochul ordered a review of the troubled Office of Cannabis Management which led to the announcement that the head of that agency would step down in September. The program has been beset by delays, legal injunctions that slowed the process, and other accusations of mismanagement.
The issue is unlikely to deter Rodriguez from being confirmed to head the Dormitory Authority.
