When Roland Conner was arrested for marijuana in the 1990s, he never imagined where he would be today: the owner of a cannabis dispensary in Greenwich Village.

The blocks surrounding his shop, Smacked Village, are bustling with NYU students and nightlife tourists - and New York made it work by taking extraordinary steps.

Certainly the biggest perk is that a state agency has located, leased, and will renovate a storefront on one of the most expensive real estate slabs in the world for someone to sell a drug that once landed people in prison.

As a result of the state's legalization of weed for adults nearly two years ago, Conner's fledgling cannabis business is also outnumbered by illicit competitors all over the city. As well as buying weed behind the counter at bodegas, New Yorkers shop at unlicensed stores and order it from underground delivery services.

Smacked's soft launch last week marked a milestone for New York's uniquely interventionist marijuana program, which prioritizes dispensary licenses for entrepreneurs with past pot offenses and takes care of their real estate concerns. Although Conner is the first entrepreneur to open his dispensary to the public, it is unclear how the state will fulfill its commitments to small businesses.

Housing Works opened one dispensary on Dec. 29 and Smacked shortly thereafter, illustrating the challenges the state faces in securing real estate and raising capital for entrepreneurs.

Kristin Jordan, CEO of cannabis-focused brokerage firm Park Jordan, explained that there is no equivalent, transparent system for comparing prices for comparable office space.

"It's like the wild west," she said. "Retail is not an open book."

Social equity programs have been unsuccessful in other legal weed states: Entrepreneurs often struggle to raise capital and find landlords willing to rent to them, while licensees with little business experience find themselves battling large cannabis companies in a market dominated by them.

New York's weed experiment is unique.

It's the boldest and most extreme social equity program ever undertaken, said Robin Goldstein, co-author of the book "Can Legal Weed Win?" "It's an experiment, and nobody knows what will happen."

As of the beginning of this month, Smacked might be open, but only on a pop-up basis. After about one month of sales, the location will close again for construction.

Conner remains undeterred despite the challenges ahead.

In an interview outside the shop before it opened, he said, "Sometimes I pinch myself.".

Here's how it works

An Adult-Use Retail Dispensary License (CAURD) has been granted to Conner. People who have been convicted of a marijuana offense prior to legalization, or who have an immediate family member who has been convicted of cannabis, are eligible for these licenses, as well as those with prior business experience. The first round of licenses is also open to nonprofits that serve formerly incarcerated populations.

So far, 66 licenses have been issued, with 56 going to justice-impacted entrepreneurs and 10 to nonprofits.

It is the Dormitory Authority of the State of New York that is responsible for finding and building CAURD locations.

As part of the lease agreement, DASNY will sublease the location to the applicant. The agency also selected 10 firms to build the dispensaries. One of the ten firms that won a contract from DASNY will work with Conner to construct Smacked. According to its CEO, Mike Wilson, the company has built 400 dispensaries in the U.S.

Meanwhile, DASNY is raising money for a $200 million public-private fund that will go toward establishing these dispensaries as well as providing a variety of other services beyond real estate and construction. Since the funds are treated like loans, licensees like Conner will eventually be required to repay the state.

DASNY President Reuben McDaniel declined to say how much money the fund has raised at a recent press conference. The fund has received $50 million from the state and needs to raise another $150 million from the private sector.

"We've had significant conversations with investors who are very interested in this program," McDaniel said. "I'm sure we'll have plenty of funds."

In DASNY's original request for proposals, the agency anticipated raising $150 million by September 2022 for turnkey dispensaries.

In programs like this, capital is always a challenge. "This gives people access they wouldn't otherwise have." McDaniel said.

Pitfalls to avoid

In nearby states such as Connecticut and Rhode Island, medical marijuana dispensaries have recently begun serving adult-use customers as a means of launching a recreational weed market.

As the Big Apple already had one of the largest illicit marijuana markets in the world, launching recreational sales nearly two years ago has prompted a proliferation of unlicensed dispensaries, causing a variety of public health concerns, including sales to minors and contaminated products.

Despite New York's two licensed dispensaries, there are an estimated 1,400 unlicensed retailers getting California weed and selling it without paying cannabis taxes.

In response to delays in securing and developing real estate, regulators have made several changes to the program. The most notable change is that CAURD applicants are now able to find their own real estate instead of waiting for a DASNY location.

"Clearly, we haven't made any progress," said Rob DiPisa, co-chair of Cole Schotz's cannabis law group.

The applicant will have to compete with DASNY for a limited pool of spaces that meet state regulatory standards if they choose to locate their own location. Retail dispensaries are required to be situated at least a certain distance from places of worship, schools, and other dispensaries, for example. Additionally, if they sign their own leases, they may lose out on the $200 million fund.

That leaves applicants in a bind: Do they strike out on their own to find a location and give up state funding, or wait in line for a DASNY location without clear information on when they'll receive one?

Goldstein said it was a tragic choice between two bad options.

DASNY did not respond to questions regarding the specifics of the process.

McDaniel acknowledged at a Cannabis Control Board meeting on Wednesday that letting CAURD applicants choose their own locations has “added some complexity to the work that we’re doing,” he said. However, “we are thrilled that the retail real estate component is actually being accelerated.”

Since the social equity fund hasn't raised the full $200 million, potential landlords are wary of working with DASNY.

As a result of cannabis' federal illegality, many landlords have lenders to answer to - and those lenders are wary of entering the cannabis industry.

DiPisa, who is negotiating with DASNY on behalf of a landlord, said landlords and lenders have become more sophisticated in working with the cannabis industry in the past decade.

In these lease agreements, there are certain requirements that lenders want to see, DiPisa said. "I think there is a learning curve [for DASNY]."

While cannabis companies are just negotiating for their own operations, DASNY is trying to enter into a large number of leases and build out facilities rapidly.

It's a great concept, but it's very difficult to actually implement, DiPisa said.

As one CAURD applicant, Jeremy Rivera's company, Kush Culture Industries, is considering funding its own construction or waiting for a state lease.

He asked, “Are you willing to wait for [DASNY] or do you want to be the first to sell?”.

Along with three other applicants, Rivera recently cofounded the CAURD Coalition to help others navigate an at times confusing process with shifting timelines and regulatory guidance.

"Capitalism has ruined cannabis," Rivera said. "We're working together to fix it."