How to Open a Cannabis Dispensary in New York

New York recently joined the growing list of states to legalize recreational marijuana when the state passed legislation allowing the recreational sale of it for adult use. With that comes an exciting new opportunity for entrepreneurs and businesses. Cannabis retailers are now able to open up shop in the Empire State and begin selling their products legally.

But before you jump into this venture, there's a lot you need to consider. Opening a dispensary in the state of New York requires careful planning and preparation, adequate financial resources, and an in-depth understanding of applicable laws and regulations. From finding the right real estate, navigating state regulations, and understanding cannabis marketing - it can be a bit confusing if you don't know what you're doing yet.

That’s why Green Leaf Marketers is here to help! In this article, we will discuss what you need to know about opening a recreational dispensary In New York so that your business can get off on the right foot.

Overview of Cannabis Legalization in New York

New York legalized recreational cannabis use in March 2021. Since then, cannabis retailers are now allowed to open up shop and begin selling their products legally. However, there are some current parameters that limit who can operate a cannabis business in New York.

Anyone considering opening a dispensary must understand the full scope of their responsibilities and what is required by law before beginning operations. It's also important to note that New York State has a Cannabis Control Board (CCB) to oversee the regulatory framework and compliance of cannabis businesses. The CCB is responsible for issuing licenses, monitoring activities and investigating violations of regulations.

The Benefits of Starting a Cannabis Dispensary in New York

Annual sales of legal cannabis across the US are on their way to hitting $100 Billion by 2030. New York is expected to be a key player in this industry, with projections indicating that sales will hit $4.2 Billion in five years. That second figure is important because it outlines the fact that starting a dispensary in New York can be a great way to tap into that ever-expanding market. It also means that millions of dollars in sales tax revenue can be reinvested in minority communities.

Other potential benefits of starting a cannabis dispensary in New York include the following:

●    Providing a safe and secure place for customers to purchase their products, as well as knowledgeable staff who can assist them with any questions they may have.

●    Increasing visibility and building brand recognition.

●    Becoming mainstream. Having a physical storefront in your area can help you stand out from the competition and draw in more customers.

Understanding the Legal Requirements for Opening a Cannabis Dispensary in New York

Opening a dispensary is not something that can be done overnight. Certain steps must be taken to ensure compliance with state laws and regulations related to cannabis retailing. It’s important to understand the legal requirements for opening a dispensary before setting out on this venture.

To operate a dispensary, businesses must satisfy the requirements outlined by the New York Office of Cannabis Management (OCM), which include having a valid business license and proof of New York residency. We will go into further detail on what you need to open a cannabis dispensary in the following sections.

Licensing

In New York, board officials issue licenses for different steps of the marijuana industry's supply chain. These steps include farming, processing, distributing, retail consumption and dispensaries.

All cannabis establishments must obtain a conditional adult-use retail dispensary license (CAURD) to operate legally. It must be obtained before any other plans for the business can proceed. The OCM's website offers detailed information on how to apply for a license.

NY Dispensary Licensing Cost

To apply for a cannabis license in New York, you must pay a non-refundable $2,000 to the Licensing Division of the OCM. Contrary to how it works in some states, that non-refundable fee covers the application and the dispensary license.

About the Application Period

The last application period for dispensary licensure in New York ended on September 26 of last year. The next application period is expected to open up at the halfway point of 2023 at the earliest.

Once the application period opens again, those who want to apply to be prospective dispensary owners can register at the New York State Business Express. All of the paperwork needed to apply is done online. Applicants must provide documentation for anyone who will be involved in ownership or will be a senior manager of the retail dispensary.

Eligibility Requirements

To be eligible under the qualifying business criteria for a for-profit cannabis dispensary, applicants must provide documentation that shows evidence that at least 30% of the applicant is owned by one individual who:

●    Is justice-involved: Meaning, either you, your parent, legal guardian, parent, spouse, child or dependent was convicted of a marijuana-related offense in New York prior to March 31, 2021. In addition, 51% of the applicant’s ownership must be held by a justice-involved owner.

●    Has business experience: This means having at least 10% ownership for a minimum of two years in a business with positive net profits during this ownership; and

●    Has sole control over the applicant: This means having the power or authority to direct or order operations, policies, management and the business's managers.

If New York maintains the same requirements for eligibility in 2023 that they did in the 2022 enrollment, applicants will likely need to provide documented evidence of a previous marijuana-related conviction and any of the requirements listed above.

Also, jurisdictions commonly ask that applicants have a minimum amount of liquidity on hand. This minimum requirement typically ranges between $400K and $1 million, depending on the size of operations and the facility.

The final steps before the licenses are missed will be getting fingerprinted for a background check, providing proof of submitting a business continuity plan and getting indemnity insurance and signing a labor peace agreement.

You can reference the OCM's website section for FAQs: What is CAURD? Am I eligible? to read more details about who is eligible to apply for a CAURD license.

Zoning Laws

It's important to ensure that your cannabis store is operating within the boundaries of your local law. Before opening a cannabis dispensary in New York, it is important to understand local zoning laws and regulations, as they affect licensing options. Zoning regulations can vary from state to state and even from city to city, so it's important to do your research before committing to any particular location.

Regional and local zoning laws affect cannabis licensing options in NY, dictating where cannabis businesses are allowed to operate and how close these stores can be to other businesses, parks, schools, or religious organizations.

Business Structure and Taxation

In order for a cannabis dispensary to be compliant with state laws and regulations, it must be operated as a limited liability company (LLC) or partnership. The dispensary owner should consult a qualified tax professional to establish the appropriate structure for their dispensary.

Additionally, cannabis dispensaries are subject to taxation rules set by the state and local governments. It's important for dispensary owners to understand and comply with these rules to remain compliant with their cannabis business operations.

One of the most important things marijuana dispensary owners must understand is the Cannabis Excise Tax. Cannabis products bought in retail dispensaries are subject to an excise Tax, which the cannabis dispensary owner pays on each item at retail sale. The excise tax rate is currently 4% of the product's purchase price.

Developing a Business Plan for Your Cannabis Dispensary

A thorough business plan is needed for all businesses, and perhaps even more so for cannabis dispensaries in New York. This business plan should include market research, budgeting and financing, marketing strategy, staffing and training.

A cannabis business plan should also include details such as the dispensary's location, its target market, the cannabis products it will offer, and a detailed financial analysis of the business.

Before embarking on their business journey, potential dispensary owners should conduct market research to understand their local cannabis industry. This includes researching cannabis trends in your area, as well as looking into possible cannabis real estate locations.

Budgeting and Financing

When starting your dispensary, it's important to have an adequate budget and access to financing. This will help you determine the cost of setting up your establishment, including cannabis real estate costs and startup costs. Depending on the location, size, and style of your shop, you will need between $500,000 and $2M to open a successful dispensary in New York State.

It's important to note that there are many U.S. banking restrictions due to marijuana being illegal at the federal level. Fortunately, there are proven ways to secure financing for cannabis dispensary loans, along with working capital, equipment financing, commercial real estate financing and AR/Invoice Line of Credit. Venture funding for marijuana startups is pouring in as more and more investors invest in cannabis-related start-ups.

Be sure to look into government and other incentives as well. For instance, New York created millions in funds for the round of CAURD applicants who applied in 2022. Known as the Social Equity Fund, this incentive helped owners build dispensary storefronts.

The Social Equity Fund also designated real estate financing for former justice-involved applicants who already have business experience. There are only a few spots left, so those interested should act quickly.

Marketing Strategy

It's vital to have effective dispensary marketing in New York, as this strategy will help you be a leader in your industry and extend your reach. Green Leaf Marketing can help create the perfect plan that complements your goals, including our services such as direct mail, print marketing, signage and banners/displays.

Staffing and Training

Having a knowledgeable staff is key to running a successful cannabis dispensary. Owners should consider staffing their dispensary with knowledgeable cannabis consultants who can offer an exceptional customer experience and provide sound advice on products.

Additionally, dispensaries should implement a thorough training program for their staff. Your approach should include learning the laws and regulations set forth by the state government as well as cannabis education to ensure compliance and that the cannabis dispensary's staff provides customers with accurate information.

Finding Real Estate for Your New York Cannabis Dispensary

Now that you understand the importance of starting a cannabis dispensary in New York, it’s time to find the perfect cannabis real estate for your business.

Importance of Location

Location is a key factor when it comes to opening a marijuana dispensary. Your dispensary should be located in an area allowing easy access and visibility from customers. Additionally, you should also look into areas with accessibility, adequate parking and public transportation so that customers can easily arrive at their destinations.

Factors to Consider When Choosing a Location

When choosing cannabis real estate, dispensary owners should consider factors such as cost, size of the space, size of the building and local zoning laws. They should also take into account the cannabis regulations set forth by New York State, such as the Cannabis Excise Tax and the distance of other Cannabis Dispensaries.

Lastly, familiarize yourself with municipalities that have opted out of letting dispensaries operate in their jurisdiction since you won't be allowed to open a dispensary there. Don't worry – there is still plenty of space left in New York State for Cannabis Dispensaries. You can get a listing of opt-outs from the state Cannabis Control Board.

Lease Negotiations

Once you have narrowed down your cannabis real estate location choices, it's time to negotiate a lease agreement. It's important to carefully review the lease agreement and negotiate terms such as length of term, rent, security deposit and other dispensary-related costs. Owners should also include provisions and clauses in their Cannabis real estate agreements that protect their interests.

Selecting Cannabis Products for Your Dispensary

When it comes to your dispensary, cannabis products are the main focus. Cannabis dispensary owners should select these products from reliable suppliers, ensure quality control and have variety in their product selection.

Types of Cannabis Products

Cannabis products come in many forms, including flowers, concentrates, pre-rolls, edibles and tinctures. Dispensary owners should be knowledgeable of the different types of cannabis products available so they can offer their customers a wide selection.

Finding Reliable Suppliers

When selecting products for your dispensary, it's important to find reliable suppliers who will provide quality cannabis products at an affordable cost. Cannabis dispensary owners should conduct research and vet cannabis suppliers to ensure the products they are selling meet their standards. When gauging your supplier, look for things like customer service, quality delivery times, product variety and pricing.

Ensuring Quality Control

It is essential for cannabis dispensary owners to ensure quality control of products when selecting them for their dispensary. As such, they should require laboratory testing results from cannabis suppliers to ensure their products are safe and meet the quality standards set forth by New York State.

Ensuring Compliance with New York State Regulations

Cannabis dispensaries in New York must comply with all state regulations. They should also familiarize themselves with the cannabis regulation guidelines set forth by the New York State Department of Health and adhere to them at all times. This includes maintaining accurate records, conducting inventory management, and implementing security measures to protect cannabis products.

Keeping Up with Regulatory Changes

Dispensary owners should stay current on cannabis regulations as they are constantly evolving. Cannabis regulations can change frequently, and you must know the most current regulations to maintain compliance.

Maintaining Accurate Records

Cannabis dispensaries must maintain accurate records in accordance with cannabis regulations to remain compliant. Dispensary owners should document every transaction and keep records of cannabis products purchased and sold, cannabis product inventories, cannabis taxes paid and other important information.

Dispensary Tips in New York – Conducting Inventory Management

So, your application went through, and you're now open for business and selling cannabis products. Now is not the time to let yourself be sidelined by sloppy or non-existent inventory management. Inventory management is critical to a dispensary's success and is one of the most important aspects of cannabis retail operations.

Cannabis dispensary owners should implement a Cannabis Inventory Management System that tracks products from purchase to sale, helps maintain accurate records, and ensures compliance with cannabis regulations.

Check out another post from our team of cannabis experts for more tips on Cannabis Inventory Management.

Security Measures

Cannabis dispensaries must also implement security measures to protect cannabis products. Not only is this a precaution for the owner, but New York cannabis regulations also require it. To stay compliant and protect themselves, owners should consider installing security cameras, security systems and other measures to protect cannabis products from theft or unauthorized access.

The Takeaways on Opening a NY Recreational Dispensary

Starting a cannabis dispensary in New York requires compliance with all state regulations, including maintaining accurate records and implementing security measures.

Dispensary owners should also select cannabis products from reliable suppliers, ensure quality control and have variety in their product selection. When selecting cannabis real estate agreements, it’s important to consider the necessary regulatory-related costs and provisions that protect your interests.

We hope you enjoyed reading about how to open a cannabis dispensary in NY and found the article helpful. Now that you know more about opening a cannabis dispensary in New York, take the next step and start researching what it takes to make your dream come true!

Compliant Cannabis Marketing with Green Leaf Marketers

At Green Leaf Marketers, we strive to provide cutting edge marketing solutions to cannabis brands big and small to meet their needs and get noticed. We work both in B2C and B2B marketing, connecting growers to dispensaries, dispensaries to consumers, and eliminating the struggles new cannabis brands face.

We serve the cannabis industry with direct mail marketing, print marketing, labeling and packaging, and promotional products.

Our Compliance team stays up to date on the latest in advertising restrictions and leaves no stone unturned - without the risk of pushing the many restrictions inherent to cannabis marketing. New York is a state we currently have frameworks developed for and will regularly update to stay up on changes to restrictions to ensure a compliant marketing plan that leverages key opportunities available.

If you are a new or established cannabis producer and want to take your marketing strategies to the next level, contact Green Leaf Marketers using the form below or email us at info@greenleafmarketers.com.