Now that adult use cannabis has been legalized in New York, many residents are considering investing in the industry. Lately we have fielded many questions like “how can I get involved? Where do I start? Which aspect of the industry should I explore? How much money do I need? When can I apply for a license?”
While we do not have all the answers yet, here are five simple things you can do now in order to be ready when the time comes to file an application for a license:
- Get Your Team in Place
Starting a cannabis business is like assembling a basketball team. You need a coach, a captain, players and fans. Your attorney, accountant and other professional advisors can act as your “coaches.” Your managing member(s) or CEO and investment partners can be your “captains.” Your employees can be your “players.” Your customers will eventually be your “fans.”
Assembling your team now can help ensure that you are ready for “tip off” when the State begins accepting applications and the “game” begins. For example, you can begin speaking to your attorneys and accountants about partnership agreements, operating agreements, forming business entities and other related issues.
- Draft Your Business Plan
Investors may need to choose which license they will apply for, the geographic region in which they wish to do business, the scale of the business, financing, and other logistics. Drafting a business plan now can help identify areas that need more development so that the company has a clear path ahead. The business plan can be used to obtain licenses, financing, and submit to potential landlords for leasing space for the business to operate.
Some businesses like food and beverage businesses are looking to “pivot” and use existing resources to enter the cannabis space. Other entrepreneurs who have never owned their own business are considering a “start up.” Regardless of your level of expertise, it is never too early to begin your diligence and prepare for eventual success. Waiting until the State promulgates regulations before starting your business plan is dangerous because there will likely be fierce competition. If you want to be first to market or at least among the first, then you probably need to start planning now.
- Secure Financing
Starting any business requires capital. A cultivation company will need to procure land. A processing company will need to purchase equipment. A distribution company will need to purchase or lease vehicles. A dispensary or consumption site will need to lease retail space and hire employees. All of these things require capital. Unless you plan to use your own cash to start your business, ascertaining how much money you need and sourcing financing now is critical.
- Explore Eligibility for Social Equity Status
New York’s law is cutting edge in that it contains a strong social equity component. The legislature’s goal is to award 50% of all licenses to social equity applicants. This creates a great deal of opportunity for companies holding a “Minority and Women Owned Business Enterprises Certification” to have an advantage in the highly competitive license procurement process. In other words, historically disadvantaged entrepreneurs may get a leg up on the competition and potentially be first to market in this instance.
- Educate Yourself
There is a lot of research you can do before the State issues draft regulations. The legal cannabis industry is highly regulated, complex and new to New York. However, the multi-billion dollar cannabis industry has been operating legally in other states like Colorado and California for many years before coming to New York. A great deal can be learned from other cannabis businesses’ successes and failures. While New York’s regulations will be unique in many respects, no doubt New York will use other states’ regulations as a frame of reference. There are many industry trade publications and other literature that individuals can use to educate themselves before entering the cannabis space. This is especially important given that New York has, for the most part, prohibited vertical integration. In other words, before deciding which license to apply for, a company may wish to educate themselves on the different aspects across the industry.
For questions about New York cannabis licensing laws or general information about our firm, please contact us at (914) 338-8050 or send an e-mail to firstname.lastname@example.org. We look forward to hearing from you.
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