Before they sell out: Get tickets to NY Cannabis Insider’s conference on Nov. 4 in Tarrytown, featuring a slew of expert panelists, free business consultations and professional headshots, networking, lunch and a happy hour.

New York’s cannabis rollout needs a bank – and there aren’t many financial institutions willing or able to service the federally illegal industry, according to the state’s public request for proposal.

As part of New York’s plan to award the first 150 marijuana retail licenses to justice-involved entrepreneurs, Gov. Kathy Hochul announced in March a $200 million public/private fund as a component of her Seeding Opportunity Initiative. It’ll be comprised of $50 million from state coffers and an expected $150 million to be raised from private investors.

That money will go toward renovations and buildouts of those 150 dispensaries, as well as loans to license holders.

The Seeding Opportunity Initiative charged the Dormitory Authority of the State of New York with finding a fund operator and a bank. DASNY did select Social Equity Impact Ventures to manage the fund in June. However, its search for a bank went public on Sept. 16 but has only two qualified applicants as of Thursday – Long Island-based Dime Community Bank and Wyoming County-based Five Star Bank (there are three other applicants but they don’t appear to be in the banking sector).

The call out closes on Monday.

“I think all stakeholders in the NY adult-use industry owe a debt of gratitude to the small handful of applicants because we’re dangerously close to having no bank for the DASNY fund,” said Jeffrey Schultz, a partner at law firm Feuerstein Kulick who focuses in part on advising private equity and venture capital funds.

“No bank means no fund, which means no CAURD program, which means no adult-use program,” Schultz said.

Considering the state’s aggressive timeline for opening retail, NY Cannabis Insider asked DASNY and the Office of Cannabis Management about the downstream effects if no suitable bank is identified by Monday.

A DASNY spokesperson said the agency does not comment on open procurements, and OCM didn’t respond as of publication.

Because banking has long-been a hot topic in cannabis, the fact that big-name financial institutions aren’t keen to enter a federally illegal space doesn’t come as much of a surprise to industry insiders.

“It surprises me that someone actually stepped up – the amount of capital involved here is much larger than most banks have the risk tolerance for,” said Nathan Girard, the CEO at Bloom Brothers, a Massachusetts-based recreational dispensary.

The SAFE Banking Act, introduced seven times into the House by US Rep. Ed Perlmutter, would allow banks and credit unions to service government-licensed businesses that grow, manufacture or produce cannabis products, in addition to those that transport, distribute, store or sell such products. But until Safe Banking – or a similar federal law – is passed, financial institutions will have a hard time justifying the risky move into cannabis.

Therefore, the response to DASNY’s call for banking is expected, according to experts.

“Not surprised,” said Steven Ernest, vice president at Chicago Atlantic, a Chicago-based private market investment firm.

It’s “very challenging to get FDIC-insured banks to loan to a federally illegal space,” Ernest said, and added that the “SAFE Banking Act will help.”

Schultz from Feuerstein Kulick agrees.

“This is a completely predictable result in light of the failure of the US Senate to pass the most basic and exceedingly sensible policy reform in the form of the SAFE Banking Act,” Schultz said.

Failure to pass the act “hurts the exact people that OCM is trying to stand up,” he said, adding that “without SAFE Banking, we’re playing with fire here.”