What Counts as Ownership or Control in NY Cannabis?

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. There is no hiding behind an LLC.

What Counts as Control?

You can have control without owning equity.

A person may have control if they:

• Make or influence key business decisions
• Direct finances, hiring, staffing, or operations
• Approve budgets or expenditures
• Control contracts or business strategy
• Restrict business activities
• Participate in day-to-day management
• Remove or override managers
• Hold titles suggesting authority (CEO, COO, CFO, Director, Manager)

Informal influence also counts.

If someone behaves like a decision-maker, OCM may treat them as a controlling True Party of Interest (TPI).

Indirect Control (The Part Operators Miss)

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
• Debt terms tied to revenue
• Influence through contracts or repayment rights

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

Vertical and Horizontal Ownership Limits

New York separates supply licenses 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:

• May be vertically integrated only within its own license.
• Cannot influence other license types.

These restrictions apply to both ownership and control.

Restricted License Overlaps

The following license combinations are prohibited:

• Processor ↔ Retail
• Distributor ↔ Retail
• Cultivator ↔ Retail

Additional limits include:

• Delivery licensees have separate influence restrictions.
• Registered Organizations face co-location and dual-use rules.
• 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 often create violations:

• 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 across restricted license types
• Stacked agreements creating hidden control

OCM evaluates substance over labels.

If an agreement creates control or significant financial benefit, it may trigger TPI status.

Red Flags OCM Watches Closely

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

Why These Rules Matter

Violations can result in:

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

Most enforcement actions begin with undisclosed ownership or control.

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Related Pages

• Who Must Be Disclosed to OCM?
• Who Must Use the TPI Portal Guide?
• When Does a Goods & Services Provider Become TPI?
• TPI Main Section Page

Source Material

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