Rules by License Type (NYCRR)

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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 123.7)

Distributors:

• May not cultivate, process, or retail without additional licenses
• Must comply with ownership and cross-interest restrictions

Distributor Operations (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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 (Part 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

Go To NYCRR Section Pages

• Social and Economic Equity (SEE) (Part 121)
• Adult-Use Applications and Licensing (Part 120)
• Rules by License Type (Part 123)‍
• Business Requirements (Part 124)‍
• Operating Requirements and Inspections (125)‍
• CAURD (Part 119)‍
• Definitions (116.1 and 118)‍
• Municipality Rulemaking (Part 119)

Source Material

• NYCRR Title 9, Part 123 (License Specific Authorizations, Requirements and Prohibitions)
• MRTA Sections 61–69
• Revised Adult- Use Regulations