One medical-marijuana bidder has a secret weapon: Wall Street


The state is expected to name the five winners of its coveted medical-marijuana licenses any day now, but one bidder thinks he has a leg up over the competition thanks to an influx of cash from an unusual source: a major investment bank.

Ari Hoffnung, a 2005 Bronx City Council candidate whose Fiorello Pharmaceuticals was named after legendary New York City Mayor Fiorello La Guardia, asserted that his company’s partnership with CastleOak Securities, a subsidiary of major Wall Street firm Cantor Fitzgerald, places his bid head-and-shoulders above the rest. He said he is the only applicant to publicly announce a partnership with a leading investment bank.

“There are, unfortunately, not too many banks who are willing to work with the medical-marijuana industry,” Mr. Hoffnung said. “I’m grateful that CastleOak stepped up to the plate and worked in partnership with us.”

CastleOak helped Mr. Hoffnung’s Fiorello Pharmaceuticals raise $7.5 million in Series A financing, an amount he hopes to double if awarded a state license. Marijuana investors estimate startup costs for companies in New York to be a minimum of $25 million. (A spokeswoman for the bank did not immediately return a request for comment.)

Institutional investment has been hard to come by in the emerging medical-marijuana industry. Because banks and credit-card companies are federally regulated, and federal law prohibits the sale and possession of marijuana, most medical-pot businesses deal solely in cash. CastleOak, a historically African-American-owned bank, saw the value in Mr. Hoffnung’s company after several meetings, he said. He also is partnering with the Clinic Marijuana Center in Denver.

Other major players are vying for a state license. One applicant is a partnership between the Greater New York Hospital Association’s for-profit subsidiary, GNYHA Ventures, and the Durst Organization. The state is expected to select the winners before the end of July.

Mr. Hoffnung is no stranger to the world of high finance or government. After losing to Oliver Koppel in the Democratic primary for City Council in 2005, he served as a managing director at Bear Stearns, the brokerage firm that failed in 2008 and was later sold to JPMorgan Chase. More recently, he was deputy comptroller for budget and public affairs under Comptroller John Liu, where he helped develop a report called “Medical Marijuana in the Big Apple.” The report found that 100,000 New York City residents would benefit under a medical-marijuana program.

Winning a state license is also a personal quest for Mr. Hoffnung: His younger brother, who lives in Israel, suffers from lymphoma and had to go through chemotherapy.

“Somebody who has an M.B.A. in finance like myself, when it comes to helping someone deal with nausea, pain and appetite issues, that’s not my skill set,” he said. “I can do fancy PowerPoint presentations and advanced Excel modeling, but when it comes to really helping somebody, aside from offering compassion and support, I’m quite limited. And I felt somewhat handicapped.”

“That led me to become a passionate advocate for medical marijuana,” he added.


VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

Leave a Reply

You must be logged in to post a comment.