With its sizable cannabis market, opportunities have arisen for businesspeople looking to start farms and grow cannabis businesses.
However, the existing owners of a cannabis business may wonder: Is it possible to own more than one cannabis business in New York?
The good news is that it is possible, but under certain regulations.
New York has rules regarding the ownership, control, and financial interests concerning cannabis businesses.
This is crucial in the case of wanting to own several dispensaries or invest in various aspects of the cannabis market. Let’s look at this in a simple way.
How Many Cannabis Dispensaries Can You Own in New York?
According to the current regulations regarding adult-use cannabis in New York, the maximum number of adult-use dispensary licenses that a person can hold is three.
If you wish to open multiple cannabis businesses in New York, you can hold ownership in up to three dispensaries.
Ownership of a cannabis business is defined according to actual owners, controllers, or individuals who gain direct financial benefits of ownership. The regulation governing this ownership definition is known as the True Party of Interest (TPI).
What Is a True Party of Interest?
A True Party of Interest, commonly called a TPI, is a person or entity that has an ownership, financial, or controlling interest in a cannabis business.
For example, regulators may look at:
- Who owns the business
- Who controls important business decisions
- Who receives money from the business
- Who holds certain leadership positions
- Whether someone has an indirect ownership interest
This means the name of an LLC is not the only thing that matters.
If you are planning to own multiple cannabis businesses in New York, understanding TPI rules is an important part of planning your business structure.
Can You Invest in More Than Three Cannabis Businesses?
At this point, there can be some variations.
In the State of New York, passive investors are permitted to own stakes in more than three retail dispensary licenses. However, being a passive investor does not equate to having control or ownership over the cannabis business.
Usually, a passive investor cannot have the same influence and participation in the venture as someone identified as a TPI. Thus, it is necessary to know what the exact stake you will have in every case is.
You may also like: How to Open a Cannabis Dispensary in New York?
Can You Own a Dispensary and a Cannabis Cultivation Business?
Not necessarily.
Different components of the cannabis field, such as distribution and retail, are treated individually in New York. Thus, there are certain restrictions on having ownership interests in different sections of the industry.
For instance, a person who has an interest in any adult-use retail establishment is generally not allowed to participate in prohibited businesses on the supply side of the cannabis sector.
Thus, owning a dispensary does not imply that one can invest in the cultivation or processing industry of cannabis in New York. Actual rules vary depending on the type of license and the type of ownership or financial interest in the cannabis field.
Can You Use Different LLCs to Own Multiple Cannabis Businesses?
The establishment of independent limited liability companies does not inherently shield owners from complying with the New York cannabis ownership regulations.
The utilization of different names for LLCs may not create a different identity consistent with the cannabis licensing requirements if the owner is found to exercise management and benefit from the four entities.
The state’s TPI rules allow for ascertaining whether the owner manages and controls the groups in question. Hence, knowledge of the regulations is vital before starting several cannabis businesses.
What Should You Know Before Opening Another Cannabis Business?
If you already own a cannabis business and want to expand, don’t just look at how many companies you can create.
You should also look at:
- Your ownership percentage
- Your level of control
- Your financial interest
- The type of cannabis license
- Your role in each business
- Whether you have indirect interests in other cannabis companies
- Whether the businesses are retail or supply-side businesses
Planning this properly from the beginning can help you avoid problems when applying for another cannabis license.
Read also: Cannabis Employment Laws in New York: What Employers Should Know
Final Thoughts
Is it possible for one person to operate multiple cannabis businesses in New York State?
Yes. However, state regulations limit the ownership and controlling interests an individual may hold in certain cannabis businesses.
For adult-use retail dispensaries in New York, an individual generally cannot hold a direct or indirect financial or controlling interest in more than three licenses. Passive investments may be subject to additional conditions and restrictions.
If you’re planning to establish multiple cannabis businesses in New York, it’s important to understand the state’s ownership rules, True Party of Interest (TPI) requirements, and licensing restrictions.
Consulting a cannabis lawyer in New York can help you evaluate your ownership structure and understand the legal requirements before moving forward.
FAQs
Am I allowed to have several cannabis shops in New York?
The answer is yes. In New York, a person can basically have a financial or controlling interest in three adult-only retail dispensary licenses within the framework of the existing rules of licensing in the cannabis sector.
What does the acronym TPI stand for?
TPI means True Party of Interest. It describes the people or entities that have some ownership or financial interest in the cannabis business.
Can I have different LLCs for various dispensaries?
Establishing different LLCs does not mean avoiding the constraints for marijuana ownership in New York. The authorities can investigate the real ownership and control of the businesses.
Is it possible to operate both a dispensary and a cannabis growing company under the law?
It is prohibited to engage in both retail and some supply cannabis industries. The category of licenses and the method of ownership determine it.
Is it possible for an investor to have shares in more than three cannabis companies?
Yes, as qualified investors can hold shares in several different retail businesses provided they meet the necessary criteria.
