With New York State having embraced adult-use cannabis, the race to secure cannabis business licenses in the Empire State is hotter than ever. And while there are several different types of licenses on offer, getting any one of them will require you to do your research, formulate a winning business plan, and be prepared to be nimble and light on your feet as you navigate a challenging regulatory environment.
In today’s post, we’ll explore the NY cannabis licensing requirements with the goal of giving you a solid grounding in the facts. Some of the areas we’ll cover include:
- Types of NY Cannabis Licenses
- NY Cannabis Licensing Criteria
- Social and Geographic Equity
- Preparing to Apply
And with that, let’s jump in!
NY Cannabis Licensing: Types of Licenses Offered
The state’s Marijuana Regulation and Taxation Act (MRTA) established two governing bodies. The first—the Cannabis Control Board (CCB)—oversees the second, the Office of Cannabis Management (OCM). The two offices will work in tandem to formulate the regulations around license types, implementation of social and economic equity plans, and allocating tax revenue from cannabis sales towards social and economic equity programs.
At the moment, there are still many open questions around the licensing process. However, one thing is certain: Instead of pursuing a staggered release of licenses, NY is likely to offer most if not all types simultaneously. This means that applicants must understand the regulatory framework and be laser-focused on the type of license they’re pursuing. These types include:
- Adult-Use Cultivator License: Applicants may apply for only one processor license, and may not also hold a license to distribute, a retail dispensary license, or have a direct or indirect interest in a retail dispensary
- Adult-Use Processor License: Applicants may not obtain a license to distribute, and may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary.
- Adult-Use Distributor License: Applicants may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary.
- Adult-Use Retail Dispensary License: Applicants may not have a direct or indirect financial or controlling interest in more than three adult-use retail dispensary licenses. In addition, they may not also hold an adult-use cultivation, processor, or other cannabis license.
What’s more, retail licenses will not be granted unless the applicant can demonstrate possession and complete control of the premises for at least a two-year term (i.e. the standard term for a NY cannabis license).
- Microbusiness License: Authorizes the limited cultivation, processing, distribution, and dispensing of a business’s own adult-use cannabis. Applicants may not hold an interest in any other license and may only distribute its own cannabis to dispensaries.
- Delivery License: Licensees may employ no more than 25 individuals for full-time paid delivery services, and may not also have a direct or indirect financial or controlling interest in more than one delivery license.
- Nursery License: A person or entity holding a cultivator’s license may obtain one nursery license to sell directly to other cultivators, cooperatives, or microbusinesses.
- Small Business Adult-Use Cooperative License: A cooperative must be comprised of New York residents as an LLC or LLP, or some other business structure approved by the Board. Applicants may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary
- Adult-Use On-Site Consumption License: Applicant must demonstrate possession and complete control of the premises for at least a two-year term (i.e. the term of the license), and may only have a direct or indirect financial or controlling interest in three adult-use on-site consumption licenses. Applicants may not also hold an adult-use retail dispensary, cultivation, processor, microbusiness, cooperative, or distributor license or be a registered organization.
Reading between the lines, this list gives us a lot to chew on. For one thing, the regulations would seem to demonstrate a strong bias against the sort of vertical integration other cannabis-legal states have embraced to varying degrees.
Also embedded in the relatively dry language of the cannabis licensing legislation is a commitment to social equity. We’ll turn our attention to that in the following section.
NY Cannabis Licensing: Social and Geographic Equity
Many of the license types stipulate that strong preference will be given to social and economic equity applicants, with a goal of 50%. How will the OCM/CCB determine this? The wording of the adult-use bill directs the office to prioritize applications by people from communities disproportionately impacted by cannabis enforcement, and applicants who qualify as a minority- or women-owned business, distressed farmer, or service-disabled veteran.
These “Social and Economic Equity” applicants will enjoy several benefits, including fee waivers or reductions, access to low-interest or interest-free loans, and no-cost counseling services such as small business coaching and financial planning. All in all, the state plans to issue 50% of licenses to these applicants.
What’s more, these special dispensations are designed to prevent their being used as a “back door” for non-qualifying applications. The law prohibits the sale or transfer of a social equity license for three years after initial licensure unless the license is sold or transferred to another qualified social equity licensee (and the transfer is approved by the CCB).
Finally, the CCB has demonstrated an interest in maintaining geographic diversity among license-holders.
NY Cannabis Licensing: Preparing to Apply
Now that you’ve got an understanding of the licensing landscape, let’s turn our attention to the nuts-and-bolts questions of what applicants will need to provide. While the OCM/CCB has not yet set out specific requirements, applicants, officers, directors, and other principals of entities applying for a license can expect at a minimum to provide such pieces of information as:
- Complete personal and demographic details
- Corporate structure and investment information
- Fingerprints for a background check
- Information about the specific property to be used for the cannabis business, including address and proof of the right to use it for at least the next two years (again, the standard licensing period)
By necessity, this is only a partial list. Applicants will need to demonstrate the capability to implement strong security and tracking procedures, as well as the necessary regulatory compliance measures expected of any cannabis business. This includes procedures to combat the diversion of cannabis products and their sale to underage people.
Finally, there are the licensing fees themselves, which have not yet been set. Previously, in the medical cannabis market applicants paid a nonrefundable $10,000 application fee and—if approved—a $200,000 fee securing their license for two years.
While it’s not yet known if the OCM/CCB will require submission of a business plan, you will most certainly need to create one. And take it from us: Crafting a business plan and understanding the regulatory, financial, and marketing landscapes require intense focus and the help of an experienced and trustworthy guide.
If you’re serious about trying to secure a NY cannabis license, there’s no one better qualified to help you navigate and manage the process. Since 2009, we’ve helped over 600 license holders all across the United States navigate the daunting array of rules, regulations, and pitfalls around applying for and securing a cannabis license. Reach out, we’d love to talk.