Rules by License Type
NYCRR Title 9, Part 123
Part 123 defines what each adult-use cannabis license type in New York is allowed to do, not allowed to do, and required to do under state law. These rules set strict boundaries around ownership, operations, and cross-licensing.
Operating outside the scope of your license is a violation, even if the activity is legal for another license type.
What This Covers
- What each adult-use license type authorizes
- Ownership and cross-ownership restrictions
- Operational permissions and prohibitions
- How OCM enforces license scope and limits
Nursery Licenses
Nursery Ownership, Interests, Business Authorizations and Prohibitions (123.1)
Nursery licenses are limited to nursery activities only.
- Only authorized ownership structures are permitted
- Certain financial interests and outside business relationships are prohibited
- Nursery licensees may not operate as cultivators, processors, distributors, or retailers
Nursery Operations (123.2)
Nursery licensees may:
- Grow and sell immature cannabis plants, clones, and seeds
- Sell only to other licensed cannabis businesses
Nursery licensees may not:
- Sell directly to consumers
- Produce mature cannabis or finished cannabis products
All tracking, sanitation, storage, and recordkeeping rules apply.
Cultivator Licenses
Cultivator Ownership, Interests, Business Authorizations and Prohibitions (123.3)
This section defines:
- Who may own or invest in a cultivator license
- Which cross-ownership arrangements are prohibited
Cultivators may not operate as processors, distributors, or retailers unless separately licensed.
Cultivator Operations (123.4)
Cultivators may:
- Plant, grow, harvest, and dry cannabis
They must:
- Follow environmental, sanitation, security, and tracking rules
- Sell only to licensed processors or distributors
Cultivators may not sell directly to consumers.
Processor Licenses
Processor Ownership, Interests, Business Authorizations and Prohibitions (123.5)
Processor licenses are limited to processing activities.
- Certain ownership structures and business relationships are prohibited
- Retail or distribution activity is not permitted without separate authorization
Processor License Facility Operations (123.6)
Processors may:
- Extract, blend, infuse, package, and label cannabis products
They must:
- Follow safety, sanitation, quality control, and packaging and labeling rules
- Transfer finished products only to licensed distributors
Distributor Licenses
Distributor Ownership, Interests, Business Authorizations and Prohibitions (123.7)
Distributors:
- May not cultivate, process, or retail without additional licenses
- Must comply with ownership and cross-interest restrictions
Distributor Operations (123.8)
Distributors may:
- Purchase cannabis products from licensed processors
- Transport and sell products to licensed retailers
They must:
- Maintain transport manifests and storage controls
- Follow tracking requirements
- Ensure products are tested and compliant before distribution
Retail Dispensary Licenses
Retail Dispensary Ownership, Interests, Business Authorizations and Prohibitions (123.9)
Retail licensees:
- Are subject to ownership and conflict-of-interest restrictions
- May not hold interests in cultivation, processing, or distribution unless explicitly permitted by law
Retail Dispensary Operations (123.10)
Retailers may:
- Sell tested, approved cannabis products to adult consumers
They must:
- Follow security, ID check, storage, sales limit, recordkeeping, and product handling rules
On-site consumption is prohibited unless separately licensed.
Microbusiness Licenses
Microbusiness Ownership, Interests, Business Authorizations and Prohibitions (123.11)
Microbusinesses must:
- Remain small and independently controlled
- Comply with ownership and cross-interest restrictions
- Stay within size and activity limits set by OCM
Microbusiness Operations (123.12)
Microbusinesses may:
- Cultivate, process, distribute, and retail cannabis on a limited scale
All activities must remain within the scope of the approved microbusiness tier.
Cooperative Licenses
Cooperative and Collective Ownership, Interests, Business Authorizations and Prohibitions (123.13)
Cooperatives must:
- Be owned and governed by their members
- Follow cooperative governance law
- Avoid outside control or prohibited investment structures
Cooperative and Collective Operations (123.14)
Cooperatives may:
- Cultivate, process, and distribute cannabis
They must:
- Follow operational, tracking, and governance requirements
- Sell only to licensed retailers, not directly to consumers
Registered Organization (RO) Licenses
RO Adult-Use Cultivator, Processor, Distributor Ownership and Prohibitions (123.15)
This section governs:
- Ownership rules for Registered Organizations operating in adult-use supply tiers
- Prohibited interests and activities
RO Adult-Use Cultivator, Processor, Distributor Operations (123.16)
ROs in this tier may:
- Cultivate, process, and distribute adult-use cannabis
They must:
- Keep medical and adult-use inventory fully separate
- Follow all operational requirements for both programs
RO Adult-Use Vertically Integrated Ownership and Prohibitions (123.17)
Certain ROs may operate vertically integrated adult-use businesses.
- Ownership, interests, and relationships with other licensees are tightly restricted
RO Adult-Use Vertically Integrated Operations (123.18)
ROs in this tier may:
- Cultivate, process, distribute, and retail adult-use cannabis
They must:
- Maintain strict separation between medical and adult-use operations
- Keep complete records and tracking for both supply chains
Delivery Licenses
Delivery Ownership, Interests, Business Authorizations and Prohibitions (123.19)
Delivery licensees:
- Must follow ownership rules similar to retail licenses
- May not have prohibited financial ties to cultivators, processors, or distributors
Delivery Operations (123.20)
Delivery licensees may:
- Deliver cannabis products directly to consumers
They must:
- Verify age
- Follow delivery limits
- Secure product during transport
- Maintain delivery logs and tracking records
Severability (123.21)
If any portion of Part 123 is ruled invalid, the remaining provisions remain enforceable.
What Operators Usually Miss
- License types are intentionally siloed
- Activities legal for one license are violations for another
- Ownership conflicts trigger enforcement even without operational violations
When This Comes Up
- During application review
- During inspections or audits
- When expanding operations or signing agreements
- During enforcement actions
What Happens If You Ignore This
- License suspension or revocation
- Forced unwinding of ownership interests
- Monetary penalties
- Denial of future license applications
Related Pages
Source Material
