Updated July 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 – Read the Act
To begin, our New York Cannabis Consultants suggest reading the laws and regulations.
More specifically, read the Marijuana Regulation & Taxation Act (MRTA) that legalized adult-use cannabis in New York State. For your convenience, our New York marijuana consulting firm created an outline of Article 4, which governs Adult-Use Cannabis in New York (begins on page 34 of the Act):
- Section 61. License application.
- 62. Information to be requested in applications for licenses.
- 63. Fees.
- 64. Selection criteria.
- 65. Limitations of licensure; duration.
- 66. License renewal.
- 67. Amendments; changes in ownership and organizational structure
- 68. Adult-use cultivator license.
- 68-a. Registered organization adult-use cultivator processor distributor retail dispensary license.
- 68-b. Registered organization adult-use cultivator, processor
- 69. Adult-use processor license.
- 70. Adult-use cooperative license.
- 71. Adult-use distributor license.
- 72. Adult-use retail dispensary license.
- 73. Microbusiness license.
- 74. Delivery license.
- 75. Nursery license.
- 76. Notification to municipalities of adult-use retail dispenary or on-site consumption license
- 77. Adult-use on-site consumption license; provisions governing on-site consumption licenses.
- 78. Record keeping and tracking.
- 79. Inspections and ongoing requirements.
- 80. Adult-use cultivators, processors or distributors not to be interested in retail dispensaries
- 81. Packaging, labeling, and administration of adult-use cannabis products.
- 82. Laboratory testing.
- 83. Provisions governing the cultivation and processing of adult-use cannabis
- 84. Provisions governing the distribution of adult-use cannabis.
- 85. Provisions governing adult-use cannabis retail dispensaries
- 86. Adult-use cannabis advertising and marketing.
- 87. Social and economic equity, minority and women-owned businesses, distressed farmers and service-disabled veterans; incubator program.
- 88. Data collection and reporting.
- 89. Regulations.
The Office of Cannabis Management (OCM) will oversee and implement the law. In addition, the OCM will issue licenses and develop regulations outlining how and when businesses can participate in the new industry.
Who can apply for licenses?
Important to note, 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. With that being said, the next step is to choose the type of New York adult-use cannabis license that you will apply for.
Step 2 – Choose a Cannabis License Type
At this point, you’ve read the Act and realized that there are various types of marijuana business licenses in New York that are available.
Accordingly, each license permits you to conduct specific types of business activities. 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. Follow the links above for more information about each New York Adult-Use Cannabis License and best practices on how to win a 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 3 – 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.
According to the Act, municipalities only have the ability to ban adult-use retail or consumption businesses. On the other hand, they are unable to ban cultivation, processor, distributor licenses, and the remaining licenses from operating within their jurisdiction. For more information, our New York Cannabis Consultants provide this link to this fact sheet regarding local government control.
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 4 – 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 Act, 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 5 – 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.
As mentioned earlier, the average start-up costs for cannabis businesses range from $600,000 to $2 million for most.
Start-up costs for cannabis businesses in New York typically include
- Application and License Fees
- Securing real estate
- Purchasing equipment
- Construction costs
- Paying attorneys, accountants, consultants, architects, etc.
- Talent acquisition
- Travel expenses
- First-year operating expenses
- and more
Therefore, you will want to put together a business plan and investment pitch deck to convince investors to fund your project. It is important to develop detailed pro-forma financial statements that show investors expected revenue, costs, and cash flows. Luckily, 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. We have over 66 consultants that work for the firm who specialize in every area of the cannabis industry. Our New York Cannabis License Consulting team can help you win any type of cannabis license you desire.
Step 6 – 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 instruction for applying, 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
- Community Impact 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 cannabis 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. For this reason, 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
New York’s Adult-use Cannabis program is governed by the Office of Cannabis Management. In other words, this is the Agency that will set the final rules, process applications, and award cannabis licenses.
Selection Criteria for New York Cannabis License Applicants
Before applying, our New York Cannabis License Consulting team wants to emphasize the importance of knowing 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:
- First, whether you can maintain control against any illegal activity
- Second, if you can comply with state regulations
- Third, if you have access to the land and buildings needed
- Fourth, that you have met all of the requirements and have the right permits
- Fifth, you qualify as a social and economic equity applicant (see above for more details) or have a plan for positively impact disproportionally impacted areas
- Sixth, you are able to mitigate environmental impacts
- Seventh, the applicant is of good moral character
- Eighth, the applicant has entered into a labor peace agreement
- Ninth, the applicant will contribute to communities and people disproportionately harmed by the enforcement of cannabis laws.
*New York Marijuana Consultants: please see legislation for the full detailed list of criteria
Cannabis Application and Licensing Fees in New York
At this moment, the State has not released any information on the exact fees for adult-use licenses. However, based on our New York Marijuana Consultants’ past experience, you can expect to pay an application and licensing fee. Additionally, the Act does state that licensees will have to pay a bi-annual licensing fee, but the exact figures for each adult-use cannabis license in New York are not released.
Our New York Cannabis Experts will update this section upon release of the official rules.
Ownership and Location limits
Our Cannabis Consultants in New York Summarize the limits on the number of cannabis licenses a person may own. In summary, no person may have a direct or indirect financial or controlling interest in more than:
- 3 adult-use retail dispensary licenses
- 1 adult-use cultivator license
- 1 adult-use processor license
- 1 adult-use microbusiness license
- 1 delivery license
However, a New York adult-use cultivator and processor can apply for one distributor license solely for distributing their own product.
Below our New York Cannabis License Experts provide further details on ownership and location limitations for each license type.
Ownership and Location Limits for Cultivator Licenses in New York
For New York cultivator licensees, you cannot also hold an adult-use retail dispensary license. Also, New york Cultivator Licensees cannot have any direct or indirect interest in any adult-use retail dispensary. However, the New York adult-use cultivation license allows you to operate in more than one location.
Ownership and Location Limits for Processor Licenses in New York
No cannabis processor licensee may hold more than one cannabis processor license. However, a single adult-use processor license in New York authorizes processor activities at multiple locations. In addition, no adult-use cannabis processor shall have a direct or indirect interest in any New York Cannabis Dispensar Retailer or Medical Cannabis Company in New York.
Ownership and Location Limits for Cooperative Licenses in New York
According to our New York Cannabis License Consulting firm, a cooperative member shall be a natural person and shall not be a member of more than one adult-use cooperative licensed pursuant to this section.
Additionally, no natural person or member of an adult-use cooperative license may have a direct or indirect financial or controlling interest in any other adult-use cannabis license issued pursuant to this chapter.
No adult-use cannabis cooperative shall have a direct or indirect interest, including by stock ownership, interlocking directors, mortgage or lien, personal or real property, or any other means, in any premises licensed as an adult-use cannabis retail dispensary or in any business licensed as an adult-use cannabis retail dispensary pursuant to this chapter.
Ownership and Location Limits for Distributor Licenses in New York
No New York distributor shall have a direct or indirect economic interest in any microbusiness, adult-use retail dispensary, adult-use on-site consumption licensee, or in any medical cannabis registered organization in New York.
Any distributor with a direct or indirect interest in a licensed cultivator or processor shall only distribute cannabis or cannabis products cultivated and/or processed by such licensee.
Ownership and Location Limits for Adult-Use Dispensary Retailer Licenses in New York
No person may have a direct or indirect financial or controlling interest in more than three adult-use retail dispensary licenses issued pursuant to this chapter.
Similarly, no person holding a retail dispensary license may also hold an:
- adult-use cultivation;
- cooperative; or
- distributor license.
Additionally, our New York Marijuana Business Consultants would like to note that a retail license must demonstrate possession of the premises within thirty days of final approval of the license. This can be shown through a lease, management agreement, or other agreement giving the applicant control over the premises. It must be in writing and for a term not less than the license period.
Ownership and Location Limits for Adult-Use Cannabis Microbusiness License in New York
A New York cannabis microbusiness licensee may not hold any direct or indirect interest in any other license and may only distribute its own cannabis and cannabis products to dispensaries.
Ownership and Location Limits for an Adult-Use Cannabis Delivery License in New York
Finally, no person may have a direct or indirect financial or controlling interest in more than one delivery license.
It’s important to recognize the ownership and location limits for the license type you are interested in. Our New York Cannabis License Consulting team is available to answer any questions you may have. Please feel free to reach out and speak with one of our New York Cannabis License Experts.
Transfer and/or change of ownership in New York Adult-use Cannabis Licenses
The board may wholly prohibit and/or prescribe specific criteria under which it will consider and allow limited transfers or changes of ownership, interest, or control during the registration or license application period and/or up to two years after an approved applicant commences licensed activities.
Local Municipality Opt-out
Cities, towns, and villages can opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses from locating within their jurisdictions. Municipalities cannot opt-out of adult-use legalization. To opt-out of allowing adult-use cannabis retail dispensaries or on-site consumption licenses, a municipality must pass a local law by December 31, 2021 or nine months after the effective date of the legislation.
Except for the opt-out provision described in the section above, all municipalities including counties, are preempted from adopting any law, rule, ordinance, regulation, or prohibition pertaining to the operation or licensure of adult-use, medical, or cannabinoid hemp licenses.
However, towns, cities, and villages are permitted to pass local laws and regulations governing the time, place, and manner of adult-use retail dispensaries and on-site consumption licenses provided that the local law and regulations do not make the operation of the license unreasonably impracticable as determined by the Cannabis Control Board. For example, cities, towns, and villages are permitted to pass laws and regulations pertaining to local zoning and the location of licensees, hours of operations, and adherence to local building codes. Municipalities may not issue local licenses to cannabis licensees.
Our New York Cannabis License Consultants recommend checking the ordinance of the municipality to intend to apply in. You’ll want to confirm the municipality allows your cannabis operation type.
Who can sell cannabis directly to consumers?
Are you wondering who can sell cannabis directly to consumers? Put differently, what New York cannabis business licenses allow you to sell cannabis to consumers?
To answer, the following adult-use cannabis licenses in New York can sell cannabis directly to consumers:
- hybrid retailer;
- micro-cultivator; or
- delivery service.
Here are some additional resources that our New York Cannabis Consulting firm recommend reviewing:
- Summary of New York’s Marijuana Regulation and Taxation Act
- Link to the full text of New Yorks Adult-Use Cannabis Bill (Marijuana Regulation and Taxation Act)
- Link to New York’s Office of Cannabis Management website
- A Factsheet outlining each adult-use cannabis license in New York.
- A Factsheet regarding local governments control on cannabis in New York
- A Fact Sheet outlining the Social and Economic Equity program for New York Adult-Use Cannabis.
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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