If you’re exploring the opportunity to open or invest in a cannabis business in New York, understanding the residency and ownership requirements is one of the first steps. Rules for cannabis license ownership in New York are not just formalities, they directly impact who qualifies for a license, who can invest, and how deals are structured.
At Seligson Law, we help cannabis businesses navigate the evolving regulatory landscape. Led by Ken Seligson, an experienced cannabis lawyer with a deep understanding of the industry, our firm supports operators, investors, and entrepreneurs in building compliant and sustainable cannabis ventures. Whether you’re applying for a license or restructuring an existing business, having a lawyer who understands New York’s licensing framework is key to staying compliant and competitive.
Here’s what you need to know about ownership and residency requirements for cannabis licensing in New York.
The Basics: What New York Requires
New York’s cannabis program is governed by the Marihuana Regulation and Taxation Act (MRTA), codified under N.Y. Cannabis Law § 3, and administered by the Office of Cannabis Management (OCM). The MRTA established a two-tier market (production side and retail side) and emphasized social and economic equity, which influences who can own or operate cannabis businesses in the state.
New York Residency Requirements
Unlike some states, New York does not impose a blanket residency requirement for cannabis licenses. Instead, applicants must demonstrate a New York presence which can be shown by simply incorporating or organizing a business entity in New York, maintaining a principal corporate location in the state, or having a majority of owners who are New York residents.
For Social and Economic Equity (SEE) status, the individual(s) with sole control of the business must qualify under at least one of the following categories:
- Minority-owned businesses
- Women-owned businesses
- Distressed farmers
- Service-disabled veteran-owned businesses
SEE applicants get priority in licensing, reduced fees, and technical assistance.
There’s also an “extra priority” available to CDI applicants: Individuals from Communities Disproportionately Impacted (CDIs) must show 5 of the first 18 years, or 7 total years, of residency in a CDI (not limited to New York), meet income thresholds, and have (or are related to someone with) a cannabis conviction
While New York no longer enforces strict residency requirements for cannabis licensing, the state continues to prioritize Social and Economic Equity (SEE) applicants. These include individuals from communities disproportionately impacted by past cannabis enforcement, as well as minority- and women-owned businesses, distressed farmers, and service-disabled veterans.
This focus ensures that those most affected by prior cannabis laws can benefit from the industry’s growth. However, out-of-state investors and businesses should structure partnerships carefully to align with SEE priorities and ownership rules—an area where guidance from an experienced cannabis lawyer is especially valuable.
Ownership Requirements: Who Can Own and How Much?
Ownership rules in New York go beyond just who holds a license. They also define how much control and influence different individuals or entities can have over a cannabis business.
To apply for a license, you generally must disclose:
- All individuals or entities with direct or indirect ownership interests
- Investors, passive owners, or anyone entitled to a share of profits
- Voting rights or managerial authority, even if not tied to equity ownership
New York regulators assess ownership and financial interests under Cannabis Law § 87 to ensure transparency and prevent conflicts across license tiers. In line with the MRTA’s two-tier market structure, adult-use retail licensees are generally prohibited from also holding cultivation, processing (manufacturing), or distribution licenses to avoid vertical integration, except in limited cases such as microbusinesses.
Social and Economic Equity Considerations
SEE applicants receive priority in licensing, reduced fees, and technical assistance. However, SEE status comes with conditions:
- At least 51% of the business must be owned and controlled by qualified individuals
- Any change in ownership or control must be disclosed and approved
- Passive investors may be permitted, but they must not undermine SEE ownership
Failing to maintain compliance with SEE ownership requirements could lead to revocation of the license. A cannabis lawyer can help ensure your agreements preserve SEE eligibility and comply with all related obligations.
Investor Involvement: What to Watch For
Out-of-state investors and cannabis business entities often look to enter New York by funding or partnering with local licensees. This can be done legally, but requires careful planning.
Keep in mind the following:
- Hidden control arrangements are prohibited
- Management agreements must be reviewed by regulators
- “Option to purchase” deals or certain investment vehicles (i.e. convertible notes and SAFEs) may trigger ownership review
If you’re bringing on capital, involve a lawyer early to ensure your investment strategy complies with state rules and supports long-term licensing.
Getting Approved: Why Ownership Structure Matters
The OCM requires detailed ownership disclosures during the application process and ongoing updates for any changes. Incomplete or misleading ownership information is one of the fastest ways to get denied or penalized.
Make sure you:
- Keep clear records of ownership and control
- Maintain updated organizational charts and cap tables
- Avoid overlapping interests across license tiers
Working with a lawyer who understands how New York regulators interpret ownership and control can reduce your risk of delays or denials.
Contact Our Cannabis Lawyers at Seligson Law Today
Understanding New York’s residency and ownership rules is critical to building a compliant cannabis business. These requirements are not static. As the market matures, regulators may tighten or revise these standards.
Whether you’re applying for a license, investing in a cannabis company, or preparing to sell or restructure, having the right legal support can help you avoid pitfalls and move forward with confidence.
Seligson Law works with operators and investors throughout New York. We help you design smart ownership structures that align with state regulations and your business goals.
To schedule an appointment or learn more, contact us at 213-293-6692 or email us at intake@seligsonlaw.com.
FAQS
1. Do I need to be a New York resident to apply for a cannabis license?
No. New York does not require every applicant to be a current resident. Instead, you must show a New York presence — for example, by being incorporated or organized in New York, maintaining your main office in the state, or having a majority of owners who are New York residents.
For Social and Economic Equity (SEE) status, the individuals with sole control of the business must qualify under one of the SEE categories (such as individuals from a Community Disproportionately Impacted, or minority-, women-, veteran-, or distressed farmer-owned businesses). Residency in New York is not a blanket requirement, and a cannabis conviction is only relevant for “extra priority” in certain SEE applications.
2. Can an investor from outside New York legally participate in a cannabis business?
Yes, but only if the structure complies with state law. Passive investment is allowed, and any controlling interest or management authority must be disclosed and approved.
3. What happens if I don’t report all ownership interests?
Failing to disclose all financial or controlling interests can lead to license denial, suspension, or revocation. Full transparency is required under Cannabis Law § 87.
4. Can I hold multiple cannabis licenses in New York?
New York prohibits most vertical integration. You cannot hold both a retail license and a cultivation,distribution, or manufacturing license unless you’re operating under a microbusiness license. Currently, one individual can be an owner in up to three retail stores.
5. What’s required to maintain SEE status after licensure?
SEE ownership and control must remain intact. Any changes to the structure must be reported and approved. Violating these terms can result in loss of licensure benefits or revocation.
6. How should I structure my cannabis company for long-term compliance?
Start with a clear cap table, strong operating agreements, and documented control rights. Work with a cannabis lawyer to ensure your structure meets New York’s ownership disclosure and licensing standards.
