New York Cannabis Startup Guide

Starting a cannabis company in New York? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in a New York cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.
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Overview
Cannabis license types
Fees and other barriers to entry
Are cannabis business plans required in New York?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in New York

Since HB 6357 passed in 2014, New York adults can possess a 30-day supply of marijuana as determined by a doctor or nurse. More than 52,400 patients have registered for medical marijuana use. The medical marijuana market in New York via dispensaries could be as high as $70 million this year. Businesses can grow and sell medical marijuana products like oil, liquids for vaping, capsules, lozenges, and topicals, but not flower or edibles. New York restricts which strains of cannabis that businesses can grow, and regulators set prices, not businesses. Patients are not allowed to grow marijuana at home. The state’s medical marijuana program is very strict, but recreational legalization could be on the way--New York State Health Department officials are holding public forums to hear citizens’ opinions on legalization.

Cannabis business license types

New York only issues licenses for one type of cannabis business: vertically integrated growers/dispensaries. These businesses grow cannabis, process it, package and label it, and sell it to patients at a retail storefront. In New York, cannabis businesses must follow strict protocols for product tracking, security, record-keeping, testing, advertising, and more. If you get a cannabis business license, you can open up to four dispensaries. New York State does not license independent testing labs for cannabis. The state is not currently issuing licenses.

Ancillary business: If you don’t want to grow or sell cannabis in New York, there are plenty of other ways to be part of the booming cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!

New York medical and recreational marijuana business plan facts callout.

Fees and other barriers to entry

Local governments may forbid cannabis companies or certain locations, so check city and county regulations.

Application fees: Applying for a cannabis producer/dispensary business license in New York costs $210,000. You get $200,000 of that refunded if your application is denied.

License fees: It’s $200,000 for a producer/dispensary license in New York and to renew your license every two years.

Do you need a cannabis business plan in New York?

A business plan is not required to get a medical marijuana business license in New York, but it will certainly make the process easier. Your application already has to include your operating plan with information on manufacturing, sale, security, hours, and staffing, some of which naturally overlap with a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan

Here’s what a New York marijuana business plan should include:
  • Product/service description: Will you run a dispensary and grow operation, cannabis consulting firm, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a marijuana dispensary, which strains or products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. (Think of it as a shorter, “greatest hits” version of your resume.) Include cannabis industry experience, as well as leadership skills, customer service, and business development experience in other industries.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • New York-specific requirements: If not included elsewhere in your application, you should include details in your business plan about your security system, product tracking, secure product transport, quality assurance, and anything else required by your state. (See page 6 here.)

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Google your city or municipality name and “cannabis regulations” or “marijuana laws” (here’s some information about Albany, for example). If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.

Helpful Links
Get expert help

Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:
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