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New York’s Cannabis Microbusiness and Three Very Different Models For It

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Room for Cannabis Production for Cannabis Nursery Licence
A propagation room in a nursery filled with soil and cannabis clones taking root.

Operating a cannabis microbusiness in New York presents unique for a licensed cannabis producer to fall on both the production and retail tiers. There are opportunities of owning/operating between 2-5 cannabis businesses (including allowing for various activities that fall under cultivation, processing, distribution, retail, delivery, and on-site consumption) with the state’s specific regulations. Here are three detailed use cases for a cannabis microbusiness, exploring the potential of this diverse license type, partnership opportunities with other license holders, and an explanation of how your preferred location (rural vs. urban) may have some impact on your overall operations.

Use Case 1: A Craft Cannabis Experience – Industrial/Commercially zoned, Indoor Cultivator, Store on Location

In this scenario, the microbusiness focuses on creating their own premium and high-quality, indoor-grown craft cannabis products, capitalizing on the authorization to cultivate, process, and sell their own high-THC cannabis products. The business operates a small-scale indoor cultivation facility (up to 3,500 ft²) in New York somewhere within or just outside of the five boroughs. The indoor facilities will help to ensure quality and stringent environmental control. Finally, the business can provide unique yet difficult-to-grow strain selection that differentiates its products from larger, industrial producers. As craft products typically represent a high people-to-plant ratio, the plants are well-groomed and produce quad-level dried cannabis sending their top colas to their dried cannabis product line. The microbusiness also processes their own products within their facility, on-site. They hand trim, dry, cure and hand-pack their products. For processing activities, their best-quality buds are carefully, whole, and hand-packed into artisanal, clear jars and hermetically sealed with nitrogen. For anything AAA or less, they practice gentle milling, the production of pre-rolls, and the hand packaging of these products. After year one, the producer may elect to begin creating a range of cannabis extract products such as resins, rosins and other artisanal concentrates. Emphasizing the “premium craft” aspect, the business focuses on a strong and compliant social media campaign to highlight their practices, their grow rooms and to appeal to frequent consumers seeking a connection with their growers and the products they curate to their customers. With the ability to sell products directly to consumers from their retail premises, the microbusiness establishes a storefront at or near their cultivation site, limiting their need for internal product logistics. This retail space is not just a point of sale but an immersive experience, offering educational sessions about cannabis and cannabis products, featuring their growing techniques/styles, the specialized extraction equipment such as hydraulic presses or BHO (butane hash oil) extraction equipment, as well as the stories of the legacy operators/technicians who are producing their craft products. This approach creates a loyal customer base that appreciates the quality and local sourcing of the products by way of an elevated consumer experience.

Seasonally, the microbusiness could leverage its permitted activity of being a Cannabis Event Organizer and provide tours as well as hosting cannabis-themed events that educate and entertain, further establishing its brand in the community. These events could include cooking with cannabis workshops, self-infusion cooking sessions with on-site consumption of the foods that the patrons have prepared during the session followed by curated discussions on the benefits of different cannabis strains, and/or incorporating arts and music nights sponsored by the business.

Use Case 2: A Community-Centric Microbusiness Featuring Several Infused Products from their Large Outdoor Cultivation Outside the City Limits.

In this use case, the microbusiness operates in (or just outside) a small city with a population under 1,000,000 in State of New York, focusing on community engagement and accessibility. The business cultivates cannabis outdoors (up to 10,000 ft²), taking advantage of the larger space allowance and the natural growing conditions, which appeals to consumers interested in more naturally grown products. This model is cheaper to grow, more sustainable and provides less variable costs to the grower. However, the business only has one crop per year with 5-6 month growing season, so the business is more susceptible to climate-induced crop loss or failure. The business’s processing facility focuses on creating basic, easy-to-use cannabis products like pre-rolled joints, rosins, butters, live resins, and simple edibles, catering to very experienced users. The retail component, located 25 miles from the cultivation site and inside the city limits, is designed to be welcoming and educational, with trained staff to guide customers’ cannabis journey.

Understanding the importance of accessibility, this microbusiness also capitalizes on the ability to deliver its cannabis products. This service is particularly beneficial for customers who are unable to visit the retail location, such as patients accessing the recreational market or those living in remote areas not well serviced by standard cannabis retail dispensaries or registered organizations (ROs). Moreover, the business establishes partnerships with local health practitioners, providing them with educational product information and materials about responsible cannabis use that can be shared with patients. This approach not only broadens their customer base but also positions the microbusiness as a responsible and community-oriented entity.

In later years the facility will expand its kitchen and begin producing a wider range of edible products such as gummies, cookies, bonbons, infused dried-teas and liquid beverages. With their access to the city’s market, their products will move quickly and, in some cases, be baked same-day offering an unparalleled freshness the illicit market can not compete with.

Use Case 3: Strategic Biomass Sourcing and Collaborative Packaging Approach (Non-cultivation, seasonal varietals and a scaling business approach)

In this particular scenario, the microbusiness adopts a less popular use case, focusing on a diverse range of cannabis flower, which can be made available from other licensed producers and partnering with a specialized third-party Tier 3 cannabis manufacturer/processor company. This approach lets the business focus an extensive variety of cannabis products, without the complexities of large-scale cultivation and processing in its initial years of operating. This approach may not be an ideal, long-term scenario for the business holder, but it is one that will allow the business to grow and scale conscientiously, recognizing that rapid growth and scale-up are a cash intensive activities, and allowing their infrastructure to be effectively created and implemented.

The business chooses to cultivate just one cannabis plant, which serves more as a symbolic gesture of its regulatory requirement to the Office of Cannabis Management for the license type, rather than a commercial endeavor. This plant, doesn’t need to be a unique or rare strain, is used as a cornerstone of the business’s branding strategy serving as an educational tool for customers. Leveraging its authorization to purchase up to 500 pounds of cannabis biomass per year from licensed entities, the microbusiness curates a selection of high-quality cannabis that may be difficult to cultivate and are poorly available. This allows them to offer a range of products many of which are only offered in small batch, catering to varied preferences among their customer base with a rotation of preferences. They rarely carry the same products between two financial quarters offering them great variability. The focus is on securing cannabis that is either unique or in high demand, ensuring that their offerings are distinctive in the marketplace. To streamline operations, the microbusiness collaborates with a third-party packaging company. This partnership is crucial for achieving professional, compliant packaging, essential for maintaining product quality and meeting regulatory standards. The packaging company might also provide innovative, environmentally friendly packaging solutions, enhancing the appeal of the products.

The packaged products are then sold through the microbusiness’s retail outlet, strategically located near their cultivation site. The retail space is designed to showcase the diverse range of products, with staff well-versed in explaining the various options to customers, enhancing the shopping experience. The microbusiness actively engages in marketing and community activities. This includes hosting educational workshops on cannabis, collaborating with local artists for unique packaging designs, and organizing events to display the variety of their products. These initiatives not only promote the brand but also foster a community-focused environment, appealing to those interested in learning more about cannabis.

What’s right for you?

Use cases 1 and 2 demonstrate how a cannabis microbusiness in New York can thrive by focusing on specific niches, creating unique customer experiences, and engaging with the community. With the state’s specific regulations, these businesses can carve out their own space in the nascent cannabis market, offering products and experiences that larger companies might not be able to provide.

Still keeping community engagement in mind, use case 3 illustrates how a microbusiness can effectively operate by sourcing various types of cannabis and focusing on customer choice and education, while outsourcing packaging to ensure product readiness for sale. This model allows the business to stand out in the market with a wide range of quality products and a strong commitment to customer engagement and education.

These are just a few ways to capitalize on cannabis microbusiness license opportunities in the state of New York. Consider what resonates with you, what makes you excited and passionate, and how can you make a meaningful impact in an emerging industry.

Applications for the New York Cannabis Microbusiness License are currently are accepted until December 18th, 2023. It is anticipated that 220 Microbusiness licenses will be awarded in this round for general licensing. With so few applications being received by the New York State Office of Cannabis Management for Microbusinesses so far, applicants for this license type hold a very high chance of winning. It is not yet clear when license applications will be accepted for this license type in subsequent rounds, that is, after December 18th, 2023, when this round closes. If you are interested in applying for the cannabis microbusiness license or any other license in the country (or globally), contact our office today at the number below for a free consultation. There is still time!

Further Reading:

New York Cannabis Microbusiness License

How to start a Cannabis Microbusiness in New York