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Should You Become a New York Cannabis Business Owner?
The cannabis industry has experienced exponential growth over the past decade. New York’s cannabis sales have already surpassed $350 million this year, while in the US, recreational cannabis sales are expected to reach nearly $40 billion by 2024. The number of cannabis business opportunities in New York’s cannabis space has exploded, and owners are already seeing as much as $450,000 in sales every month.
As the OCM establishes a concrete licensing process and the state eliminates over 2,000 illicit stores dominating the market, you can expect revenue to continue soaring. But this won’t last forever. If you want to capitalize on everything the market has to offer while it’s in its most profitable state, you’ll need to buy or start a cannabis business ASAP. Here’s why.
Start now, not Later
Starting a new business involves substantial upfront expenses that you’ll want to pay off quickly. If you’re planning on starting a cannabis business in New York, you can pay off these expenses faster by launching your business sooner rather than later.
New York’s cannabis industry is currently experiencing rapid growth and high profitability. By starting your cannabis business now, you can take advantage of this boom, recover your investment, and begin making a profit much faster.
The industry will keep growing as long as these four things keep happening:
- The number of legal and regulatory inconsistencies diminish.
- Illicit dispensaries keep getting shut down.
- The OCM continues opening legal dispensaries.
- Consumers become educated and accustomed to the value of legal cannabis.
There is no doubt that New York’s cannabis market will continue on this upward trend well into the future, but you’ll see profit sooner by starting a business now.
How You can own a New York Cannabis Business
You can become a cannabis business owner in a couple of different ways:
- Buying a pre-existing cannabis business or cannabis license for sale.
- Applying for a cannabis license and building your own business from scratch.
Each of these methods will allow you to become a cannabis business owner, but the pathway, expenses, timeline, and amount of required work will vary. These are the pros and cons of each.
Buying a Cannabis Business or License in New York
Buying a cannabis business or cannabis license for sale in New York is a great option for aspiring cannabis business owners. There are plenty of advantages that come with buying a business or license, instead of applying for a license and starting from scratch.
Pros
The time it takes to buy a cannabis startup or license will almost always be faster than going through the application and licensing process.
If you’re someone who wants to capitalize on New York’s cannabis market ASAP, buying a business is definitely a good option. This is the fastest way to become a cannabis business owner, without the hassle of applying for a license. You’ll also enjoy the benefit of immediate cash flow, which will allow you to pay off your investment as quickly as possible.
Buying just a license is the second fastest way to become a cannabis business owner, even though you won’t have 100% ownership right away, and you may still need to build out your location.
In New York, Conditional Adult-use Retail Dispensary Licenses (CAURD) are extremely versatile, and one of the most commonly bought licenses by aspiring cannabis business owners. Buying a CAURD license allows you to skip the New York cannabis license application process, and guarantees that you’ll own a license. But, finding a seller who meets your ideal terms can be tricky.
CAURD licensees need to hold onto some level of ownership in the license for four years from the date the CAURD license was issued. Because of this, CAURD holders typically sell ownership of their license in installments over a four year period. As a buyer, this means you will need a lawyer to negotiate terms with the CAURD license seller, to ensure you’re walking into a deal that’s right for you.
While each CAURD seller-buyer agreement will vary, the flexibility can be very advantageous for both parties.
CAURD licenses are not tied to a specific location, allowing you to open a dispensary at the compliant location of your choice. Additionally, an installment-based payment structure makes it easier to pay for the license compared to a large upfront payment.
By buying a cannabis startup or a cannabis license, you’ll be capitalizing on this first-mover advantage and tapping into New York’s highly profitable market.
Cons
The high price is one of the biggest negatives of purchasing a cannabis business or license.
In New York, cannabis businesses and CAURD licenses can sell for as much as one to two million dollars, or more. Scraping together that much cash can be very difficult, but it definitely isn’t impossible.
Many sellers are willing to negotiate payment terms, and for some licenses, like CAURD licenses, this is typically required. You can also find funding through private lenders, investors, or grants. To learn more about funding cannabis business opportunities, check out our recent article!
Along with the high initial cost of buying a business or license, there could be additional expenses down the road. You may have to pay for renovations, the completion of your store’s build-out, security fittings, and other things required to get your store up-and-running.
Be sure to spend some time thinking about all of your options, speaking to different sellers, and consulting cannabis industry experts before jumping into an agreement.
Applying for a License and Starting a Cannabis Business
Since the New York market is still relatively new, most people have started their cannabis business from scratch. This involves waiting for a New York cannabis license application window to be announced, creating a comprehensive application, submitting the application to the OCM during an open application window, and waiting for the license lottery draw.
If you’re awarded a license, you will then need to go through the post-licensing process, which can involve finding a compliant cannabis property, building out your location, participating in mandatory inspections and much more. It’s a long process, but it’s definitely worth it. Here’s why.
Pros
Getting a cannabis license and starting a business from scratch has a lower upfront cost, and provides you with more flexibility. Initially, you’ll only have to cover the application fee, and you’ll have more time to find investors.
For many, the control you’ll have over the entire process of building your business makes applying for a license more appealing than buying an existing one. You’ll be the one deciding the location, branding, design choices, and more.
By keeping up with upcoming New York cannabis license application windows and understanding New York’s cannabis business regulations, you can capitalize on this profitable market. This can be made even easier by working with cannabis consultants.
Having professional business and application support from a cannabis consulting firm is another advantage that comes with starting a cannabis business from scratch. CannDelta’s cannabis consultants, can help you create your ideal cannabis business and make the process very straight-forward. Cannabis professionals can also advise you on the ways you can ensure your business will be as profitable, and see a return on investment ASAP.
Cons
There are some drawbacks that come with starting a new cannabis business in New York. Application fees can be relatively expensive and the whole process can be time consuming. This is because the OCM uses a lottery system to determine which applicants will receive licenses. If you aren’t selected in the lottery, you’ll have to wait until the next draw, which isn’t always in the near future. Also, creating the application can be challenging and time consuming since you’ll have to submit a number of documents and have a thorough understanding of compliance.
In many cases, you will also need to secure occupancy of a cannabis property before, or shortly after receiving your license. Finding a location that complies with the OCM’s regulations and setback distance requirements can be challenging, and it can drastically delay the process of opening your dispensary.
The multi-step process of applying for a license, getting a license, finding a location, and engaging in all of the required post-licensing activities can take a very long time, which many people aren’t willing to spend waiting.
What Should You do?
Get into New York’s cannabis industry! Regardless of whether you buy a cannabis dispensary for sale, or apply for a license, sooner is unquestionably better. The New York cannabis market is currently very profitable and full of cannabis investment opportunities for those who want to start their business as soon as possible.
Therefore, if you have the upfront capital required to buy a business or a license, doing so will give you the fastest ROI. CannDelta has numerous buyer-seller contacts all over New York, New Jersey, and the rest of the US. Find a cannabis dispensary for sale and numerous other cannabis investment opportunities on our website!
On the other hand, starting a cannabis business from scratch will give you full control, allow you to find investors, and face the expenses at a slower rate. But licenses aren’t guaranteed, and the application and post-licensing processes can be hard to navigate without application and licensing support.
CannDelta is a cannabis startup consulting firm that offers ‘turn-key’ application and licensing services. Submit a complete application and cruise through the post-licensing process stress free with CannDelta’s support.
Frequently Asked Questions
What does it Take to Start a Successful and Legal Cannabis Business in New York?
Understanding how to start a cannabis brand or business in New York is crucial to your business’ overall success. It will take a lot of hard work, patience, and money, before you can call yourself a cannabis business owner. Starting a cannabis business will require that you submit an application during an application window, win a license in the lottery, and complete the entire post-licensing process. From there, you will need to ensure your effectively marketing your business, and considering dispensary franchise opportunities. Alternatively, you can purchase a cannabis business for sale, which will allow you to skip the application process.
How can I Invest in the Cannabis Industry?
You can invest in the cannabis industry by purchasing equity in a cannabis business for sale, investing in dispensary franchise opportunities, or by finding CBD business opportunities to invest in. If you are interested in investing in cannabis businesses, you should look for license holders who may require capital to get their operation up-and-running. This is a great way to enable a business to secure ownership stake early on in a cannabis business.
How do I Find Money for a Cannabis Startup?
While figuring out how to start a cannabis brand or startup, many people struggle to find a source of funding. FInding funding can be challenging, but there are numerous options available. You can work with investors, private lenders, apply for grants, and more. If you are someone who will be relying heavily on funding, it’s a good idea to start a cannabis business from scratch, instead of trying to buy a cannabis business. Doing so will allow you to find investors along the way using a conditional licensing pathway. However, every situation is unique, so it is best to thoroughly research the industry, and consider exploring CBD business opportunities.
Can I buy a Cannabis License in New York?
You can buy a cannabis license in New York. The license that is most typically sold in New York is the Conditional Adult-use Retail Dispensary license (CAURD) since it offers a considerable level of flexibility. CAURD licenses are not tied to a specific location, meaning that a buyer can open a dispensary at any compliant location in New York (with OCM approval).
What are the Pros of Starting a Cannabis Business?
Starting a cannabis business from scratch has several advantages:
- Lower upfront costs.
- More time to find investors if your application is successful.
- Choice of business location.
- Control over branding and stylistic choices and how the store is built-out.
- Option to secure advice from cannabis professionals to ensure profitability and a quick return on investment.
What are the Pros of Buying a Cannabis Business?
There are many benefits of buying a cannabis business instead of starting one from scratch.
- Very fast process compared to starting a cannabis business.
- Quicker return on your investment.
- Location is already built and operational
