With New York’s Senate Bill S854A, the pre-existing cannabis laws in the state have now made these products more accessible. Some believe this state is on track to bring in over $400 million in tax revenue, primarily from New York City alone.
Now that New York allows recreational cannabis dispensaries to set up shop, you may wonder about the cost of getting a dispensary license in 2022. The total cost to apply for a producer/dispensary license in New York is $210,000. However, remember that you’ll need to renew your dispensary license every two years.
Of course, the cost of a dispensary license is just the beginning. You’ll also need to factor in the cost of renting or buying a property, as well as the cost of security, product liability insurance, and more. But getting a dispensary license is the first step if you’re looking to get into the cannabis industry in New York.
Here’s some additional insight into opening a dispensary in New York.
What Does a NY Dispensary License Cost in 2022?
While you cannot open a dispensary here at the moment unless you’ve managed to snag one of the few medical marijuana dispensary licenses in New York, the state began accepting retail dispensary applications in the Summer of 2022. The state also started handing out retail dispensary licenses in late summer.
The application fees involved with getting a New York dispensary license total at $210,000. However, if your application gets denied, you’ll be reimbursed $200,000. The other $10,000 is non-refundable.
Qualifications to Submit an Application for a Dispensary in New York
Who is allowed to apply for a cannabis dispensary license in New York?
At this point, the state isn’t taking medical dispensary applications. However, its retail program is ready for New York resident applications and tends to favor people who have been convicted of a cannabis-related crime or have family ties to someone who has been convicted. This program also prefers applicants with a minimum of 10% ownership in a profitable business at some time.
The majority ownership of the applying entity or company needs to have been in New York state for at least 180 days over the last year or 540 days over the last three years.
Furthermore, the individual, someone they were dependent on, a parent, legal guardian, spouse, or child must have been convicted of a cannabis-related offense in the state before 03/31/2021.
Dispensary vs. NY Microbusiness Cost
MRTA 73-1 says that getting a Microbusiness license in NY gives a business “limited ability to cultivate, process, distribute, deliver, and dispense its own cannabis.” At this point, we’re unsure of what a New York Microbusiness license will cost. However, it could be similar to the Dispensary license cost.
As quoted earlier in this post, licensing a dispensary involves two fees with an application. The first fee is a non-refundable application fee of $10,000. Then, a $200,000 registration fee can be refunded if the application doesn’t result in a registered dispensary.
More on New York Dispensary Licensing
Who is eligible to apply for a license to operate a cannabis dispensary in New York?
The majority of ownership of the submitting entity must be located in New York State for 180 days in the past year or 540 days over the past three years.
You, the person you were dependent on, a parent, legal guardian, spouse, or dependent, must have been convicted of a marijuana-related offense in New York any time before 3/31/2021.
You have to own a minimum of 10% during the last two years of a company with a minimum of two years of net profits.
Alternatively, you can achieve the state’s business requirements if you’ve been the owner of at least a small portion of a non-profit that includes all of the following:
- People who have convictions for marijuana within New York on its board or working as officers of the non-profit
- At the very minimum, two years of net assets or profits
- A minimum of five full-time employees
- Serves the communities and individuals who have an elevated rate of cannabis-related arrests and convictions
- A track record of creating jobs for those who have cannabis-related convictions.
The company that has sole control of the business in question with a minimum of 30% of its ownership stake satisfying the residency requirement as well as the conviction and for-profit company requirements, or meets the non-profit business requirements.
Additionally, at least fifty-one percent of the business’s ownership interests must 1) achieve the residency requirement along with the conviction and for-profit business requirements or the non-profit business requirement 2) or to satisfy the requirements for conviction.
What is the price for a retail license application?
The retail license application cost includes a $2,000 non-refundable fee.
Is there a limit to the retail licensing I can obtain? How many locations can I establish using these licenses?
Each license allows you to open one store. You’re allowed to have a maximum 3 retail licenses, meaning you can set up three shops.
If I get a retail license, can I obtain other cannabis licenses?
In the majority of cases, retail license holders cannot get other types of cannabis licenses. If you possess a retail license, you cannot hold marijuana processing, cooperative, cultivation, microbusiness, and distribution licenses.
What criteria will be used to evaluate applications?
The precise procedure isn’t known as of yet. The guidelines released on 03/10/2022 indicate that they will provide preference to those whose arrest was made in low-income or high-risk marijuana arrest area; and those with a long-standing experience in managing profitable businesses and an adequate team of employees, including retail stores.
New York recently became the most recent state to permit adult-use marijuana consumption. New York Senate Bill S854A NY Senate Bill S854A incorporates impressive changes into existing laws to allow cannabis access to all.
As per the Marijuana Regulation and Taxation Act (MRTA), legalizing cannabis for recreational use could generate $436 million in tax revenue, of which New York City may gain an additional $336 million. The legislation will impact approximately 3.1 million cannabis users across New York state, out of which 1.1 million live within New York City.
If you’re an adult-use cannabis user and would like to start a dispensary In New York, here’s what you need to know about establishing a successful cannabis business in the state:
How can I proactively wait for my New York dispensary licensure?
If you’ve already applied for your license, in the meantime, you should create a comprehensive strategy for your venture. It should involve:
- Financial planning
- Operational planning
- QC (Quality Control) & QA (Quality Assurance) planning
- Labor Code compliance planning
- Job creation & workforce planning
- Security planning
- Anything else you believe will support your business’s mission and attract investment.
What Kinds of Licenses will be Needed to Open Dispensaries in New York?
If you’re planning to begin an enterprise in cannabis, the first step is to check to see whether your town or city will allow it. After confirming your operation’s legality, you can apply for your cannabis microbusiness license.
You’ll need to prepare a complete plan, including extensive market research and an established business plan before obtaining your license. Here’s a list of licenses you can obtain:
Registered Organization Adult-Use Cultivator, Processor Distributor, Retail Dispensary License
With a Registered Organization (RO) license, your company can market products it’s produced at no more than three locations or dispensaries they possess.
The only condition is that you can’t utilize any other type of cannabis license while you hold this license.
The license’s renewal involves having the RO continue providing medical cannabis at a quantity that the CCB sets.
Registered Organization Adult-Use Cultivator for Adults, Processor, and Distributor License
This license permits adult-use activities, including one company’s processing, cultivation, and distribution. The requirement is that you sell only your products at specific places.
A Cultivator License permits holders to grow as well as sell their cannabis products to processor licensees. The license includes all cannabis-related agricultural activities, including cultivating, planting, cloning, trimming, harvesting, drying, and grading.
You may also have a processor and distributor in addition to the cultivator’s license; however, you can only distribute and process your own yields.
After you have obtained your license, you might be limited in terms of processing volume. With this being the case, you’ll require the processor’s permit to process more. You may also obtain the license to work in more than one place should you need to. The decision-making process is handled through the CCB.
Adult-Use Processor License
Through this licensure, you can purchase marijuana products directly from growers and perform several tasks such as mixing, extracting, infusing, packaging, labeling, branding, and preparing or making other marijuana products.
You’re also able to distribute your cannabis product to licensed distributors.
The only restriction is that you can’t sell products to distributors outside of your personal product line. Additionally, you’re not permitted to be involved in activities with your company other than those covered by the processing license.
To maintain your processor’s license, you must also follow a currently undisclosed minimal operating requirement.
Adult-Use On-Site Consumption License
The Adult-Use On-Site Consumption License permits the patrons of your operation to consume cannabis-related products such as joints and vape carts within the boundaries of your establishment. The only requirement for maintaining this license is that you cannot become a holder of any other MRTA-approved cannabis license.
You can, however, hold up to 3 on-site consumption licenses at a time.
Before you can officially receive your license, you must prove you have the available space for the license and how you plan to use it. The process must be completed within 30 days, and the lease must last at least the duration of the license’s validity. The leased space cannot be within 500 yards of a school or 200 feet of a church or other religious establishment. Additionally, the store’s customers must be over 21 years old.
Adult-Use Cooperative License
The Adult-Use Cooperative License is intended for vertically integrated cooperatives that can manage all aspects of producing and selling cannabis-related products at a licensed location. This license allows marijuana cultivation, possession, acquisition, processing, distribution, and sales.
The requirement for this license is that every cooperative member has to be a New York resident. It must be legally registered as an LLC, LLP, or another business entity.
Furthermore, the business must also have subordinate capital and needs to be democratically managed with one vote for each member. It must distribute assets or profits based on active involvement in the cooperative and must work following the seven principles of cooperatives published in 1995 by the International Cooperative Alliance.
Adult-Use Retail Dispensary License
This kind of license permits cannabusinesses the ability to sell cannabis products through a licensed dispensary. The requirements are that you can only hold interest in up to three dispensaries while you have this type of license.
Furthermore, if your license is for retail. you’re not able to have other licenses in addition to this one.
To obtain this license, applicants must show they have a valid property within the 30 days that follow receiving final approval. The lease of the property should be for as long as the license is valid. Additionally, it should not be located closer than 500 feet away from an educational institution and must be located at least 200 feet from any religious establishment.
Retail dispensaries’ shops should be open to the public through the front of the establishment.
The Distributor License permits holders to purchase goods from processors and sell these to dispensaries as well as in-store consumption establishments.
The prerequisite for obtaining a distributor’s license is that the licensee must avoid holding any additional licenses other than a processor and cultivator license.
If you’ve obtained the three licenses, then you can only distribute your own products and cannot distribute anyone else’s.
The holders of exclusive distribution licenses may change their fee according to product volume as determined by the CCB. They must also adhere to their minimum operating requirements to keep the license.
This license lets the holder enjoy limited cultivation, processing, distribution, delivery, and sales abilities. They can do all of this with their own cannabis and marijuana-derived products. The only restriction is that they can’t be a part of any other cannabis-related license or business.
What’s more is that they may only use their own product brand at their sales outlets and cannot carry any other brands. The CCB will determine the precise criteria that determine what constitutes micro-businesses, and the licensees and their businesses must comply with the rules. The licenses will need to follow economic and social equity guidelines.
The Delivery License is intended for businesses or proprietors who wish to establish a consumer-facing cannabis retail delivery service. They’re eligible to have this license as long as they’re free of any other adult-use cannabis licenses. The only requirement is that they can’t employ more than 25 individuals with full-time delivery contracts each week.
Delivery License holders aren’t allowed to hold several licenses.
The specifics of the holder’s delivery license right to use the license have not yet been decided on by the CCB and license distribution is dependent on economic and social equity-related initiatives.
The Nursery License lets firms perform cannabis-related activities, including manufacturing, distribution, selling, and distribution of various agricultural products, including cannabis seeds, clones, and more.
Nursery license holders can obtain a cultivator’s license that allows them to sell their products to other license holders, such as microbusinesses, cultivators, cooperatives, and registered organizations.
The CCB plans to determine the rights granted under the Nursery License, and who will be allowed to hold these licenses will depend on economic and social equity initiatives.
Main Elements of the New York’s Marijuana Regulation and Taxation Act Outlined
- 40 percent of the tax revenue from adult-use sales will go toward communities most impacted by the drug war.
- No-interest or low-interest loans, fee reductions, exemptions, or waivers, and assistance with preparing applications and operating businesses will be offered to social equity applicants.
- Micro-businesses can establish vertical operations that will allow them to achieve economies of scale. Vertical integration is prohibited to all businesses, excluding current MMJ business operators.
- In the first three years after the date of issuance, social equity licensees will be prohibited from selling or transferring the licenses they hold.
- People who are from “communities disproportionately impacted by the enforcement of cannabis prohibition,” in addition to businesses owned by women and minorities, disabled veterans, and financially challenged farmers, are considered social equity applicants with the law. The publication of the detailed guidelines is still in the works.
What is The Legal Marijuana Possession Limit Currently?
The bill, S854A, includes various requirements for marijuana possession by recreational and medical users, patients, and legal cannabusinesses.
Patients’ limit for possession is a maximum of 60 days worth of supplies, as set by their physician. They could also be allowed to have an additional 60-day supply seven days prior to when their current 60-day supply runs out.
For recreational users over twenty-one years old, possessing three ounces of cannabis or up to 24 grams of cannabis concentrate or extract is allowed.
How Much to Start a Cannabis Business in New York?
The application cost in New York to obtain a cannabis producer or dispensary business license is $210,000. In the event that the applicant’s request is rejected, they will be issued $200,000 as a refund.
The fee for a cannabis producer or dispensary license In New York is $200,000, and you’ll need to renew your license every two years.
Can I Get Funding to Open a Dispensary in New York?
We now have some approximate figures. So, let’s consider a couple of possibilities for raising the funds required to cover the expenses of opening a dispensary in New York:
Cannabis Business Loan Options
You’ll find various loans to finance your cannabis-related endeavor. The best one for your situation will need to consider your financial needs.
Those interested in equipment financing options should understand that this is a form of loan or lease that is used to purchase equipment for processing, growing, or other dispensary activities.
Working Capital Loans
Working Capital Loans offer a lot for firms that lack recurring revenue. Thus, if you’re looking for a viable option to fund your operation and your business does not have enough regular income, this can be used to handle your overhead costs, such as the cost of payroll and inventory.
Merchant Cash Advances
Cash advances from merchants allow dispensaries and other companies that provide consumers with the option of cash advances on purchases to come, which you are required to pay back plus the amount of a set fee.
Invoice factoring lets cannabis businesses sell invoices with outstanding balances to factoring firms at a reduced price, including but not limited to growers. The cost is usually in accordance with the time your customers take to finish their invoices.
Purchase Order Financing
Business operators can take out loans through Purchase Order Financing to pay for customer orders. If your customers purchase the item and you send the money for it, you pay an amount in addition to the order cost, similar to when factoring.
Commercial Real Estate Loans
Commercial Real Estate Loans for cannabis operations allow for the purchase of warehouses, sites, and other physical locations necessary to run your cannabis business. Ultimately, if you’re looking for a place to grow or open your dispensary, this is an option to explore.
Qualify for a Business Loan in Cannabis
Here are the most common requirements to apply for a commercial loan:
- A solid personal credit score.
- A long credit history – Keep in mind, that the length of your credit history could impact your application. In the majority of cases, you’ll need at least three years of credit history to apply for a business loan.
- No bankruptcies on record.
- A business bank account.
- A certain time operating the business. Most lenders require that you’ve been running the business for a minimum of six months to one year.
- Legal standing: For eligibility purposes, owners of businesses need to have legal standing, meaning they must be US citizens or permanent residents.
Alternative Cannabis Business Funding Options
Other innovative methods to get an investment loan in the event that your cannabis company isn’t eligible to obtain a business loan:
- Crowdfunding. The Securities and Exchange Commission (SEC) in the United States allows individuals to invest as much as $2,200 into small-scale enterprises to gain ownership shares. Businesses can raise as much as $1.07 million through this method, and crowdfunding is a straightforward method to raise capital.
- Lines of credit for businesses. Alternative finance providers may be willing to offer credit lines to assist cannabis companies in funding ongoing expenses, even though these options tend to be more costly than other loan types.
- Venture capitalists. Investors with a wealth of capital who are interested in helping small companies grow, typically with equity in exchange, are found in almost every sector.
- Angel investors. Like venture capitalists, Angel investors aid businesses at their beginning stage and usually manage smaller amounts of money. However, if you’re just starting out and need capital, angel investors can
- Real estate loans. These loans are used to buy or refinance the land or buildings that your company needs.
- Private equity financing. Private equity firms might offer short-term, high-interest, or financing in exchange for a significant share of ownership of your company.
- Loans for home equity. A line of credit permits homeowners to take out loans in exchange for the worth of their home. But, you need to ensure that the usage is legal.
- Family and friend loans. Family members and friends can also invest in your business by lending you money and earning interest. Hire an attorney to assist in the creation of legal contracts that holds everyone accountable.
- Personal loans. Have an excellent credit score? You may have a better chance of getting a personal loan accepted. However, make sure to ask your lender to determine whether you can use the capital to begin an enterprise in the cannabis space.
How Big is New York’s Current Cannabis Industry?
The legal use of cannabis for medical reasons began in New York in 2013.
Based on the MRTA’s assumptions, the retail market and its central authority for regulation, the Cannabis Control Board and Office of Cannabis Management, have been in place since the end of 2021. There’s a good chance that dispensaries will open in New York over the next year or two.
Retail sales are expected to begin as early as this year (2022). Based on the most reliable forecasts, the initial year’s sales alone could bring more than $1 billion in revenue. With the expected increase in sales, these numbers will expand to 4 billion dollars.
According to the office of the Governor in New York, they believe they’ll earn $300 million in tax revenue from cannabis sales annually.
When it comes to products made from cannabis, various options are available. The New York market primarily offers flower, oils, and tinctures. Of those, flower comprise the majority of the market and are predicted to grow the fastest following the legalization of cannabis for recreational use. However, pills and edibles are also expected to enter the cannabis space in New York.
Based on the state legislature’s smoking policies, especially concerning workplace regulations, there may be room for cannabis products like edibles and pills. These options are already available on the market to a certain extent; however, their acceptance is dependent on the legislation passed by members of the NY State Assembly.
What Should We Expect from Retail?
Over the next few years, the state’s retail market should experience massive growth. We expect that by 2025, New York will be able to boast $3.7 billion in cannabis sales.
Which Key Players of the Cannabis Industry are Prepared to Invest in New York Dispensaries?
Currently, many major corporations in the cannabis industry are looking for investment opportunities in New York’s cannabis market. Below is a list of some of the major ones we expect to see:
MedMen recently purchased PharmaCann for an impressive $682 million. The company has the most licenses in the whole state. It also bought Bloomfield as one of the first five holders of a cannabis license in 2018.
In the words of their spokesperson Daniel Yi, MedMen is ready to leverage its vast experience and extensive financial and operational resources to help strengthen its New York cannabis operations.
The company claims that it will focus on a clear plan of ownership for its local operators and an inclusive cannabis program that’s moving towards increasing social justice.
Curaleaf is currently present throughout seven New York counties, with more dispensaries set to open, according to the company’s website. It’s working to position itself to capitalize on the expanding market for cannabis that’s available in New York.
As it was among the market pioneers and most prominent operations, it has had more time in business, allowing it to establish more dispensaries than the average cannabusiness. Additionally, acquisitions can aid in Curaleaf becoming an essential player in the New York cannabis market, and investors will be keen to keep an eye on its growth.
Vireo Health is among the few private, large-scale businesses within the New York cannabis market at this time. It’s a doctor-led multi-state medical cannabis firm and is positioned as an advocate for compassionate cannabis-based health products and services.
The company’s top executives have been subject to the scrutiny of the law because they were involved in some transport that contained cannabis oils from Minnesota to New York. Although this is undoubtedly a significant issue for the business precisely because it’s privately held, the actual effect of this particular incident is not yet known.
No matter what happens, Vireo Health is sure to become a big player in medical marijuana in New York and is looking into developing its operations to focus on recreational cannabis.
How Can Northstar Assist Your Cannabis Business?
Northstar is a full-service cannabis CPA and fractional CFO firm that works with some of the largest names in the cannabis industry. We’re prepared to help you with your cannabusiness needs, whether it’s license application writing, business plan or financial model development, pitch deck creation, or anything else related to building and running a successful cannabis company in New York.
Our team can provide you with the resources and advice you need to get started on the right foot. Contact us today to speak with one of our experts and learn how we’ll guide your success.