It wouldn’t be a good day if the statist regime of New York wasn’t telling business owners how to run their business, now would it?
Of latest interest is the seeming debacle that erupted in New York over cannabis.
Here’s how this played out.
75 years ago New York State created an entity called the Dormitory Authority for the State of New York (DASNY). It was designed to oversee the construction of literal dormitories for a state women’s college, but you just can’t keep the government beast down.
Today DASNY has a broad scope, best explained on Wikipedia:
The Dormitory Authority of the State of New York provides construction, financing, and allied services which serve the public good of New York State. More specifically, as a New York State public-benefit corporation, DASNY provides services for public and non-proprietary (i.e., nonprofit) private universities in New York State; for not-for-profit healthcare facilities in the State; and for other New York State-related institutions/purposes (such as State court facilities and State pension bonds). Like other public authorities in New York, DASNY has the flexibility to borrow on behalf of the state through legislative authorization, rather than incurring general obligation debt, which requires voter approval.
In March of 2021, New York State created the Office of Cannabis Management. The job of OCM is to oversee virtually all aspect of cannabis in the state, with a heavy, heavy slant towards “equity”, meaning,
“The MRTA (Marijuana Recreation and Taxation Act) sets out one of the nation’s most comprehensive and progressive legal frameworks for the regulation of the adult-use, medical and hemp industries, with a focus on ensuring the greatest possible participation by communities historically impacted by prohibition… the OCM and the appointment of a Chief Equity Officer [are] charged with developing a social equity plan designed to facilitate and support participation by social equity applicants. The MRTA also limits the number of licenses that can be owned by one company and prohibits the vertical integration of production and retail services, further ensuring that small businesses have an opportunity to compete in the new market.”
First, OCM oversaw license distribution for cultivators. Then in the summer of 2022, OCM turned its eye toward distribution and retail.
OCM leveraged DASNY to oversee the construction of cannabis dispensaries, using a combination of private and state funds to build the stores ($150M in private capital and $50M of taxpayer dollars), and an even wackier process to meter out the licenses.
To apply and actually receive a license you pretty much needed to satisfy two conditions:
- You were convicted of some marijuana offense in your prior life
- You needed have run a “successful” business
Nobody knows how to qualify a “successful” business, but it’s probably no surprise that those two statements are often in conflict, leading to partnerships between multiple people to satisfy the claim.
When the announcements came, retailing licenses were first issued to prior marijuana convicts, with a small number of licenses going to non-profits.
And it was tough going: over 900 applicants applied for a meager 150 licenses that would only be made available to past convicts and their families.
What would a licensee get with this license?
In theory a brand new dispensary, complete with a POS system, all paid for by the state.
To choose who would build the stores, DASNY ran an RFP process. There were 95 applicants with 10 companies ultimately selected in November of 2022.
When it came time for the POS decision, DASNY decided there could only be one winner, with the exception being non-profit dispensaries that could use what POS system they wanted.
In August of 2022, the first RFP was made available to POS companies with bidding due on November 4 after being pushed multiple times.
The rules for this POS RFP stipulated that the lowest bidder would receive the chance to meet with DASNY to align with requirements so that a final, two-year exclusive contract could be negotiated.
When the dust cleared, Dutchie was the lowest bidder with a $0 offer. But oddly, after meeting with DASNY, bidding was reopened in November of 2022.
Insiders told us it was because Dutchie bid $0 for the first POS terminal, then charged substantially more for the remaining terminals and probably mandated that the dispensaries use their (likely insanely overpriced) payments, in what would seem to be a classic Toast bait-n-switch play (it’s almost like the cultures between the two companies are the exact same, and they shared the same management…).
Either way, here are the results from that second RFP bidding process.
There were 9 total bidders with three POS companies (Eco Science, Blaze, and Dutchie) bidding $0.
Ultimately Dutchie won the process in December..
Any reasonable taxpayer (and retailer) should have a shit ton of questions.
How did Dutchie win?
What companies did DASNY talk with?
What separated three bidders with the same bid amount?
What were the final terms for Dutchie?
Oh, and:
WHO THE FUCK BELIEVES ANYTHING OF VALUE COSTS 0 FUCKING DOLLARS?
You want to talk about a scam, someone needs to formally investigate this.
The NY dispensaries aren’t stupid enough to believe in a $0 POS and have actively started reaching out to Dutchie’s competitors.
Why question it?
For starters, Dutchie isn’t about to lose a boatload of money giving away free systems to 150 dispensaries.
Not when they have apparent money problems, are laying off staff, and are, what appears to be, undermining and forcibly removing the founders.
So how is Dutchie going to make its money?
Pull a Toast and raw-dog sodomize the poor dispensary operators who are already reeling from a life where they’ve been branded a convict?
Provide 0 support for the “$0” in revenue they’re going to book?
Just the idea that something of value could be $0 is so disingenuous it’s a moral hazard.
It turns out that we’re not the only ones questioning DASNY’s processes.
Just read here to learn more about the apparent dysfunction of DASNY, and here about internal auditing concerns.
We reached out to Kristen Costello, DASNY’s procurement manager for the POS RFP, but heard nothing.
#Classicgovernment.
The good news?
Because there’s $150M of private dollars behind this, someone’s going to get to the truth.
Investors demand answers, and there are undoubtedly reporting covenants as part of the private funding.
It’s just that it’s sadly going to take time, and dispensaries might suffer in the interim.
Still: who wouldn’t love to hear the response from private investors when they’re told that the POS chosen in the RFP is “free”?
You don’t end up with $150M to invest by being a complete fucktard.
That role’s already being played by statist government regimes.