Updated June 2021 | New York Cannabis Business Consulting Firm
New York Cannabis License Consulting
Big News! In March 2021, New York passed a bill to legalize adult-use cannabis! Analysts estimate the adult-use market to reach $2.3 billion in annual sales by the fourth year.
Luckily, Governor Cuomo states that sales can be expected within one year after the legislation is enacted. Therefore, we can expect adult-use sales to begin in 2022. Now is the time to start preparing to win an adult-use cannabis license in New York.
In this article, you will find information on how to win a cannabis license and start a profitable cannabis business in New York. Whether you want to start an adult-use dispensary, cultivation center, nursery, cannabis delivery business, or any other type of cannabis operation, our New York cannabis consulting firm has the resources to ensure your success in winning a license.
Return on investment on Cannabis Licenses
Before we dive into the details surrounding cannabis licensing in New York, let’s examine the return on investment (ROI) that one can expect from starting a cannabis business in New York. We’ll use recent and comparable cannabis deals to estimate the ROI cannabis entrepreneurs can expect.
First, the average start-up costs for a vertically integrated cannabis business ranges from $1 million – $5 million, as reported by Marijuana Business Daily in their 2021 Factbook. In 2017, MedMen acquired a vertically integrated medical marijuana license in New York for roughly $25 million. Thus, within a 4 year period, New York Cannabis investors realized a return on investment ranging from 5x – 12x.
Recently in 2021, Ascend Wellness Holdings acquired that same vertically integrated license in New York for $73 million in February 2021. Similarly, in nearby markets, such as Illinois which has just completed its first year of adult-use sales, cannabis retail licenses are getting acquired for $14 – $15 million on average. The average start-up costs for retail operations ranges from $600,000 to $1,500,000 million. Thus, investors in adult-use cannabis retail businesses are experiencing returns ranging from 9x – 23x within a 2 to 5 year period. Similarly, investors are experiencing comparable and sometimes larger returns on cultivation and processing licenses.
Do these returns meet your investment criteria? If so, learn how our New York Cannabis Experts can help you get an adult-use cannabis license in New York and start a profitable cannabis business.
To speak with one of our New York Cannabis Experts about winning a license and starting a cannabis business, please follow the link below.
Now, let’s discuss how to win a cannabis License in New York.
How To Win a New York Cannabis License
Step 1 – Choose a Cannabis License Type
To begin, anyone can apply to cultivate, process, distribute, or dispense cannabis in the state of New York. In other words, both in-state and out-of-state residents can apply for a marijuana license in New York.
There are multiple different licenses that are available for various purposes. So if you want a license, the first step is to determine what type of operation you plan to start so that you apply for the right license.
Types of Adult-use New York Cannabis Licenses:
- Cultivator License
- Cooperative License
- Processor License
- Nursery License
- Delivery License
- Distributor License
- Microbusiness License
- Retail Dispensary License
- On-Site Consumption License
- Cannabis Testing License
Once you determine the type of New York cannabis license that you will apply for, the next step is to review the regulations surrounding that type of marijuana license. If you decide that you can meet all the requirements of the State, then you will want to identify the location where you will operate the cannabis business.
Step 2 – Identify Location for the proposed cannabis business
The second step is to identify property that is suitable for the cannabis operation you plan to start. For instance, do you plan to start a cannabis business in an existing building or would you prefer building the facility from scratch? Will you lease or own the property? There are pros and cons to both options and you should weigh them carefully.
In either case, you will have to submit floor designs of the proposed facility in your New York cannabis license application. The State will carefully review your floor designs to ensure that all regulations are being met. Our Cannabis Consultants in New York can assist you with developing facility designs that are compliant and guaranteed to receive a full score from the State in your application.
You will also want to check the local ordinances of the municipality for your chosen location. For example, you will want to make sure that the municipality has no restrictions governing the type of cannabis operation you intend to start.
Below is a map created by our New York Marijuana Consultants showing the location of the current Registered Organizations (vertically integrated cannabis operations) in New York:
As you can see, certain areas contain more cannabis operations than others. While the city has a larger customer base, are you prepared to deal with the increased competition? You can obtain a first-mover advantage by starting cannabis businesses in areas that lack current operations, but then you trade-off a larger market size. As such, we encourage you to work with our New York Cannabis Consultants to develop a strategy that fits your needs.
Step 3 – Recruit a Team of Experienced Cannabis Operators or Relevant Experience
After you have the location figured out, the next step is to recruit a team. Ideally, your team should reflect your ability to operate a compliant and effective cannabis operation. We recommend recruiting a team of experienced cannabis operators or experts in a related industry whose skills will translate into cannabis.
For instance, if you are applying for a cannabis processor license, you will want to recruit a team of senior management with experience in cannabis extraction, or better yet, managing an extraction team. Beyond relevant experience, it’s extremely important to build a diverse team. According to the bill, New York’s application graders will actively promote applicants that foster racial, ethnic, and gender diversity in their workforce.
More importantly, our New York Cannabis License Consulting firm highly recommends finding a team member who qualifies as a Social Equity Applicant. If they have experience in cannabis or a related field, that’s a bonus. If the Social Equity Applicant is also a veteran then you have found what we in the industry like to call a “unicorn“.
What defines a Social Equity Applicant?
Glad you asked. As part of New York’s Social and Economic Equity plan for adult-use cannabis, the Board will give preference to applicants that qualify as Social Equity Applicants. Their reason for doing so is to improve the communities and populations that were negatively impacted by the prohibition of cannabis.
Since New York plans to award 50% of licenses to Social Equity Applicants, qualifying as a Social Equity Applicant is “make or break” for winning a license. The Board will give preference to applicants who are:
- From communities disproportionately impacted by the enforcement of cannabis prohibition; Or
- Minority or women-owned business;
- Distressed farmers; and
- Service-disabled veterans.
Moreover, New York’s cannabis board will give EXTRA preference to Social Equity Applicants that:
- Is a member of a community disproportionately impacted by the enforcement of cannabis prohibition;
- Has an income lower than eighty percent of the median income of the county in which the applicant resides; and
- Was convicted of a marihuana-related offense prior to the effective date of the bill, or had a parent, guardian, child, spouse, or dependent, or was a dependent of an individual who, prior to the effective date of the bill, was convicted of a marihuana-related offense.
New York’s Communities Disproportionately Impacted
You may be wondering what “Communities disproportionately impacted” means. As defined by the bill, Disproportionately Impacted Communities are certain geographic areas, such as, but not limited to, precincts, zip codes, neighborhoods, and political subdivisions that have a history of:
- Convictions; and
- Other law enforcement practices.
These areas reflect disparate enforcement of cannabis prohibition. The board will issue guidelines to determine how to assess which communities have been disproportionately impacted and how to assess if someone is a member of a community disproportionately impacted. Our New York Cannabis Consulting team will update this section once more information is released.
We understand that recruiting a team of experienced cannabis professionals can be challenging. For this reason, our cannabis consulting firm in New York offers talent acquisition services to help you build a supreme team. A strong team will help you raise capital and receive a higher score from the State on your cannabis Application. Reach out today to speak with our Marijuana Consultants in New York and learn more about our talent acquisition services.
Step 4- Raise Capital from Investors
At this point, you have identified a property and recruited a team. Next, you will want to raise capital from investors to fund the start-up costs of your operation.
Start-up costs for cannabis businesses in New York typically include
- Paying attorneys, accountants, consultants, etc.
- Talent acquisition
- Application and License Fees
- Construction costs
- Securing real estate
- Purchasing equipment
- Travel expenses
- First-year operating expenses
- and more
You will want to put together a business plan and investment pitch deck to convince investors to fund your project. As mentioned earlier, the average start-up costs for cannabis businesses range from $600,000 to $2 million for most. It is important to develop detailed Pro-forma financial statements that show investors expected revenue, costs, and cash flows. Our New York Cannabis Experts can help you put together an investment prospectus and raise capital. To find out more, please follow the link below to speak with our cannabis consulting firm in New York.
Step 5- Write a Cannabis Application for a New York Cannabis License
Finally, it is time to sit down and write an application for the cannabis license you would like to win. The State is still in the process of developing the application that will detail the requirements of the application, and our New York Cannabis License Consulting firm will update this section once the application is released.
However, based on our experience writing cannabis license applications across the globe, we predict that the application will require you to write a:
- Business Plan
- Security Plan
- Operating Plan
- Marketing Plan
- Seed-to-sale Tracking Plan
- Employee Staffing and Training Plan
- Diversity Plan
- Environmental Plan
- and more
As shown above, marijuana license applications can easily reach the 1,000 – 2,000 page count. The State will use your application to determine if you qualify to operate a compliant, safe, and effective cannabis business in New York. Thus, writing a strong cannabis license application in New York is essential for starting a cannabis business.
Luckily, Quantum 9’s team of New York Cannabis Consultants consists of expert application writers who can significantly improve your chances of receiving a top score and winning a license. We specialize in winning licenses and starting profitable cannabis businesses. Save time and allow us to manage your application from start to finish. Our Marijuana Consultants in New York are eager to help you become a cannabis business owner in the booming adult-use market.
Additional Information from our New York Cannabis License Consulting Firm
Selection Criteria for New York Cannabis License Applicants
Before applying, it is important to know the selection criteria. More specifically, the State will determine whether to award you a license depending on your ability to demonstrate your plans to adhere to State regulations. Another major consideration is your team’s experience in the cannabis industry, as described above.
Furthermore, the State will grade your application based on the following:
- Firstly, whether you can maintain control against any illegal activity
- Secondly, if you can comply with state regulations
- Thirdly, if you have access to the land and buildings needed
- Fourthly, that you have met all of the requirements and have the right permits
- Lastly, you are able to mitigate environmental impacts
*New York Marijuana Consultants: please see legislation for the full detailed list of criteria
In the past, when you applied for a New York medical cannabis license, there were fees. For example, businesses have to pay a non-refundable $10,000 application fee and a $200,000 registration fee. But, the $200,000 fee will be returned only if the registration is denied.
Of course, the adult-use licensee may have different fees based on the amount of cannabis to be produced or the type of license applied for. At this moment, the State has not released any information on the fees for adult-use licenses. Our New York Cannabis Experts will update this section upon release of the official rules.
Conclusions from our Cannabis Consulting Firm in New York
Our New York Cannabis License Consulting firm is ready to help you become a cannabis business owner. Currently, we offer various cannabis consulting services in New York, including application writing services, capital raising, talent acquisition, facility design, brand development, and more.
If you want to start a marijuana business in New York, save time, money, and headaches by allowing us to manage your project from start to finish. We’ve won licenses in over 27 U.S. States, so why not let the experts do the work?
We’re here to help. As global leaders in cannabis consulting, we have the resources to win you a license and help you become a cannabis business owner.
So, if you have any questions, be sure to contact us. Our team can’t wait to help you build your cannabis business!
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