Ownership & Control Restrictions

What This Covers

New York State imposes strict ownership and control restrictions for cannabis licenses. These rules define who may participate in a license, how much authority they can hold, and which relationships are prohibited to maintain a two-tier market structure and prevent hidden control through contracts, loans, or financial arrangements.

What Counts as Ownership

A person or entity is considered an owner if they hold:

Equity, membership, or profit interest
Shares, units, or other financial stakes
Rights to revenue, profit distributions, or repayment based on profits
Authority to sell, transfer, or assign part of the business
Any financial arrangement where investment leads to financial return

Ownership can be direct or indirect. If an entity owns part of a business, OCM evaluates every individual behind that entity.

What Counts as Control

A person may have control without ownership if they:

Make or influence key business decisions
Direct finances, hiring, staffing, or operations
Approve budgets or expenditures
Have authority over contracts or strategy
Directly or indirectly restrict operations
Participate in day-to-day management
Can remove or override managers
Hold titles suggesting authority (CEO, COO, CFO, Director, Manager)

Informal influence also counts. OCM may classify anyone behaving as a decision-maker as a controlling TPI.

Indirect Control

OCM evaluates indirect influence beyond formal documents, including:

Shared finances with owners (including household members)
Co-signing loans or guaranteeing credit
Ownership in an entity connected to the license
Financial leverage over an owner
Providing advice that drives decisions
Influence through contracts, revenue rights, or debt terms

Even without equity or title, anyone steering the business may be treated as a TPI.

Vertical and Horizontal Ownership Limits

New York separates supply licenses (cultivation, processing, distribution) from retail licenses.

Retail participants: Cannot have financial or controlling interest in cultivation, processing, or distribution
Supply participants: Cannot have financial or controlling interest in retail
Microbusiness exception: Can be vertically integrated only within its own license; no influence over other license types

Restrictions by License Type

The following license overlaps are not allowed:

Processor ↔ Retail
Distributor ↔ Retail
Cultivator ↔ Retail

Additional restrictions include:

Delivery licensees: Additional influence limits
Registered Organizations: Co-location and dual-use restrictions
Microbusinesses: Cannot own or influence additional license types

Any ownership, revenue rights, loan terms, or agreements crossing these lines can violate OCM rules.

Prohibited Arrangements

The following are strictly prohibited under TPI rules:

Owning part of two incompatible license types
Loans where repayment depends on revenue or profit
Contracts granting operational authority or leverage
Undisclosed management or operator roles
Options or rights converting into ownership
Agreements controlling pricing, purchasing, staffing, or strategy
Revenue or profit shares creating TPI status across restricted license types
Stacked agreements that produce hidden control or financial benefit

OCM may treat any agreement creating control or significant benefit as TPI-relevant, regardless of title or equity.

Red Flags OCM Watches

OCM routinely monitors:

Management companies acting as operators
Consultants making operational decisions
Family members with shared finances
Landlords receiving percentage rent or profit share
Investors with revenue-dependent repayment
Exclusive agreements limiting licensee independence
Loan terms allowing operational influence
Ownership structures hiding beneficial owners

If a person can direct or financially benefit from a license, OCM may classify them as a TPI.

Why These Rules Matter

Violations can result in:

Application denial
Required license restructuring
Removal of individuals or entities
Fines or enforcement actions
License suspension or revocation

Source Material

OCM TPI Hub
TPI Portal FAQ (2024)
Retailer TPI FAQ
Supply TPI FAQ
Goods & Services FAQ