When Nathan Benelyahou bought an Upper West Side multifamily building last year, the broker-turned-investor had no idea that one of the retail tenants on the building’s ground floor might not be what it seemed.
At the base of the 13-unit apartment building at 252 W. 108th St., around the corner from buzzy bagel shop Absolute Bagels, sat a black-and-white storefront, Muddy’s Dispo.
“When I first bought the building, it was just a smoke shop, which is legal. They were just selling smoke paraphernalia,” Benelyahou said. “Then, as things progressed, they started adding CBD, and then I guess edibles, and then I guess they delved all the way into marijuana. What can I do, though?”
Flickr/NYC Mayor’s Office/Michael Appleton
Benelyahou took out a $1.6M acquisition loan from JPMorgan Chase in July 2023 to finance the purchase, property records show . His is one of 20 New York City buildings with a JPMorgan mortgage that were caught up in a crackdown on unlicensed weed dispensaries this summer, according to a Bisnow analysis of cannabis -related violations issued by the New York City Sheriff’s Office.
Muddy’s Dispo was one of around 750 New York City storefronts shuttered between May and July as part of Operation Padlock to Protect, a multi-agency task force from Mayor Eric Adams that targeted retailers selling marijuana without a license.
Operators were the primary target of the initiative — which a judge found unconstitutional in October — and landlords have wound up in the crosshairs, but lenders have so far escaped responsibility.
Loans for the shuttered properties came from more than 300 lenders, according to an analysis by real estate intelligence firm PropertyScout and Bisnow of cannabis summonses recorded by the New York City Office of Administrative Trials and Hearings, cross-checked with city property records.
While the majority of the lenders in the analysis only had one loan tied to a shuttered property, six banks provided mortgages to almost 100 of the buildings where stores were closed during Operation Padlock.Forty buildings with storefronts targeted by the city have active mortgages that were originated by Signature Bank , by far the most of any lender […]
New York’s Crackdown On Unlicensed Weed Revealed The Depth Of Banks’ Exposure To Drug Sales
