For many New York cannabis businesses operating in the illicit or gray market, preparing to go mainstream is essential. Some have made the move and are ready to share their wisdom. For those who haven’t, preparing during the lead up to the state’s eventual adult-use legalization could prove critical to securing a place in the one-day legal market.
However, making the transition has its series of difficulties.
New York State currently allows a select few options for cannabis business licenses. Ancillary businesses that don’t directly touch the plant are popular due to their ability to replicate virtually any other market without risk of violating the law. As such, these ventures often require little to no additional licensing, acting as any other legal business would.
Companies like head shops and manufacturers are also seeing opportunity to a lesser degree. When it comes to the plant itself, though, the closest most companies can currently come to touching it is CBD. Under regulations, CBD cultivators and retailers can sell products, provided that they contain less than .3% THC.
The only businesses allowed to touch THC-rich plants are the few vertically-integrated license holders granted by the state. New York officials began its program granting five licenses to companies, giving them the opportunity to open four dispensaries and one manufacturing location across New York.
As program interest grew, parts of the state further suffered from lack of access to a dispensary. The state granted five additional licenses under the same four-dispensary, one manufacturing location arrangement to meet the demand.
A limit on licenses is just one hurdle. The history of high entry costs have been a constant concern as well.
Estimates suggest that the price of entry for vertically-integrated licenses were between $15 and $30 million, according to various sources. The high price point to enter the space, if it were to open again any time, includes various fees and start-up costs. According to the state Department of Health, fees include a non-refundable $10,000 application, a $200,000 refundable payment to the state and the ability to prove a company can open the five mentioned locations.
Published: October 20, 2019
Founder & Interim Editor of L.A. Cannabis News