The Sailer Plan for marijuana retailers is not working out

New York implemented my old idea to only to give licenses for legal weed dealing to the less competent.

I’ve long advocated the idea that if we are going to legalize drugs, at minimum we need to make sure that MBAs don’t take over, like they are taking over the sports gambling bookie business and making it far easier to lose your house betting on the Knicks online than when you had to go meet in person with a bookie called Tony Cannoli.

Yeah, I know techies love to put down MBAs as shallow and uninspired. But, speaking as an old MBA, we are at least pretty good at methodically exploiting sure things, such as addictions. The last innovation America needs is Walmart selling half-kilos of Coca-Cola brand 100% pure cocaine for incredibly low prices.

And if you want to limit marijuana retailing to small businesses, please don’t let them get taken over by hyper-industrious Korean immigrants who will make weed shopping economical and convenient the way they long ago took over most of the African-American hair supply shops in the ‘hood, driving aspiring black bourgeoisie out of a traditional route to advancement.

So, if you want to hand out reparations to blacks, do society a favor by restricting cannabis retailing to African-Americans who won’t be very good at it.

The state of New York pretty much took up my plan. But …

From the New York Times:

How a Plan for Reparations Became a Debt Trap for Marijuana Retailers

New York persisted with a plan to build flagship dispensaries for people the state once prosecuted for weed offenses, even as it failed to meet its goals.

By Ashley Southall

Feb. 26, 2025

In 2023, Roland Conner became the first person with a criminal conviction to open a licensed cannabis dispensary in New York, making him the face of a $200 million effort to turn people once prosecuted for marijuana offenses into flagship sellers.

It’s widely believed by the left-of-center that dope consumers rather than dope dealers were heavily imprisoned.

Nah …

Retailers like Mr. Conner, who already owned profitable businesses like gyms and restaurants, were recruited by state regulators with the offer of a head-start reaping legalization’s windfall. Gov. Kathy Hochul had promised that the initiative, to be financed primarily by private investors, would provide 150 businesses with turnkey storefronts, low-interest loans and extensive support.

But that didn’t happen. 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, like construction costs that they’re now on the hook for. 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, called the Cannabis Social Equity Investment Fund.

The situation exposes how an experiment in reparations that sought to lift people disproportionately harmed by prior enforcement against marijuana not only failed but also helped derail the rollout of legal cannabis 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, though he worked out a payment arrangement with the fund to keep his store.

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. …

More than 300 legal recreational dispensaries have opened since 2022, and sales have surpassed $1 billion despite the rollout’s problems. But the fund’s failings struck at the heart of New York’s intentions, said Eric Olson, a corporate and finance lawyer at Cleary Gottlieb, a white-shoe firm helping some licensees to develop their businesses pro bono.

“This population suffered because of the drug war, and this was meant to recompense them for what happened,” he said. “It seems like both state actors and private actors are just extracting value from them on unfair terms.”

Thomas Butler, a publicist representing the fund, dismissed criticism of the program as “absurd.” He said that 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.

Uh, yeah …

… After New York legalized recreational cannabis in 2021, regulators sought to help people of color and small businesses compete with deep-pocketed companies that dominated other markets.

At the same time, Mr. Conner was wrestling with a suggestion from his son, Darius Conner, to apply for a retail license. After a string of convictions for selling marijuana in the 1990s, he was skeptical of the government.

In Illinois and Massachusetts, states that legalized recreational cannabis before New York, lawmakers sought to assist people they once arrested with grants or forgivable loans. But the help arrived well after legalization, and too late for many people. New York officials wanted to help future retailers up front to avoid the same pitfalls.

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, then pass the cost on to retailers in the form of loans.

The aim was to eliminate two of the biggest obstacles for cannabis sellers, who struggle more than typical retailers to get the money and property they need to get started. Cannabis entrepreneurs face higher costs, stricter rules and more limited resources than typical small businesses largely because marijuana remains illegal on the federal level. As a result, most banks, small business programs and landlords won’t work with dispensaries.

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.”

It’s almost as if this shows that reparations in general would prove to be a disaster.