Do you have a killer brand idea for the cannabis industry? In New York, you can enter the cannabis market through a specialized license called a Branding license.
With the Adult-Use Processor Type 3 Branding license, you can promote your brands' cannabis products in the state's recreational market. However, it does not authorize any plant-touching activities, nor does it require licensed premises.
If this sounds a bit confusing, don't worry! In this guide, we'll walk you through the steps to apply for the New York cannabis branding license and help you understand its definition, regulations, and requirements. Let's get started!
What Is the NY Adult-Use Processor Type 3 Branding License?
New York offers different options when it comes to adult-use cannabis licensing, but the Processor Type 3 Branding license is a unique aspect of the state's regulatory framework.
As mentioned above, this license allows businesses to market cannabis products without the need to physically process them. Type 3 Branding license holders cannot engage in any plant-touching activities, including but not limited to:
- Cultivating
- Processing
- Extracting
- Blending
- Infusing
- Packaging
- Labeling
Under this license, businesses are solely authorized to partner with processors that are licensed to manufacture their products. This is done through white-label cannabis agreements.
What Are White-Label Cannabis Agreements?
Essentially, white-label cannabis agreements are arrangements where one company (brand) allows another to white-label and manufacture cannabis products under the brand's name.
What Activities Does This License Authorize?
Adult-Use Processor Type 3 Branding license holders can partner with licensees that are authorized to handle cannabis plants, like processors. Such businesses can process, brand, and distribute cannabis products on their behalf.
Section 123.5 of Title 9 of the New York Code Rules and Regulations (NYCRR) states that cannabis processors may only enter into branding or white-label cannabis agreements with a true party of interest (TPI) or another licensee that isn't prohibited under the state's rules.
The New York cannabis branding license provides an opportunity to overcome the limitations of such regulations by allowing brands to enter into white-label agreements without having to become a TPI in another licensed processor or establish a manufacturing facility.
Adult-Use Processor Type 3 Branding licensees are also authorized to provide what partners need to perform the plant-touching activities with which both parties have entered into their white-label agreements, such as:
- Intellectual property, such as logos and product quality plans
- Ingredients, except for cannabis, such as flavoring agents or rolling papers
- Other manufacturing materials and equipment, such as vaporizers
The activities that partners agree to perform may include following specific manufacturing guidelines to maintain brand standards. Actually, Adult-Use Processor Type 3 Branding license holders can set certain protocols for the processor to comply with, such as those regarding the quality of finished products or manufacturing procedures.
Limitations and Requirements
Licensees performing plant-touching activities must also maintain the brand's strict, detailed recordkeeping while processing cannabis products. These businesses are subject to the same restrictions as processors, including limitations on ownership, control, and relationships with other cannabis businesses, so they cannot have any direct or indirect interest in dispensaries, consumption sites, delivery services, registered organizations, or laboratories.
Additionally, Adult-Use Processor Type 3 Branding license holders are limited to the specific activities approved by the Office of Cannabis Management (OCM) and cannot expand their operations without prior approval.
How to Apply for a Type 3 Branding License in New York
If you want to apply for an Adult-Use Processor Type 3 Branding license in New York, you must complete the following steps:
- Go to the New York Business Express (NYBE) portal.
- Create a NY.gov account or sign in if you already have one.
- Complete your application by entering the required information. (You don't have to complete it all at once. Use the "save" and "resume" features and continue filling in the blanks later, if necessary.)
- Submit your application.
- Check your application status by logging in with your NYBE account at any time.
Type 3 Processor License Requirements
As with any other cannabis business application in NY, you can only be eligible for the Adult-Use Processor Type 3 Branding license if you meet the following requirements:
- Be 21 years old or over. (This rule applies to all parties in the ownership structure.)
- Follow all applicable laws and ordinances for New York cannabis compliance.
- Be a United States citizen or be lawfully admitted for permanent residence in the country. (If it's a corporation, all principal officers and more than one-half of its directors must meet this requirement.)
- Have a federal employee identification number ("FEIN"). (Individuals who operate as a sole proprietor and have no employees can use a social security number or SSN.)
- Be able to provide name and contact information for all TPIs.
- Have no direct or indirect interest in adult-use retail dispensaries, consumption sites, delivery services, registered organizations, or laboratories.
- Be able to provide information on the brand's management, ownership, and finances, including organizational structure or charts, proposed existing sources of capital, or capitalization tables.
Benefits and Uses of a Type 3 Branding License
Do you want to know if the Adult-Use Processor Type 3 Branding license is for you? Let's explore its uses and benefits:
Type 3 Processor License: Uses
The Adult-Use Processor Type 3 Branding license offers a unique opportunity to businesses and individuals who want to enter the NY cannabis industry without having to engage in physical activities or make a huge investment in infrastructure.
These are some of the business uses of this license:
- Branding and marketing: Since this license allows you to perform cannabis brand marketing in NY, you can develop and market cannabis products manufactured by your partners under your brand name, focusing solely on standing out from competitors and attracting customers.
- Licensing agreements: In the NY cannabis industry, this licensing option offers the opportunity to partner with other businesses. You can produce or distribute your branded products through white-label agreements.
- Product development: Through partnerships and white-label agreements, you can collaborate with processors to create innovative products that meet changing consumer preferences.
- Market expansion: With this license, you can market innovative products to different audiences, expanding your business into new markets.
Type 3 Processor License: Benefits
Besides the business opportunities mentioned above, the Adult-Use Processor Type 3 Branding license also offers many advantages to holders, making it an attractive option for cannabis brands.
These are the key Type 3 Processor license benefits:
- No limited lottery: Unlike other cannabis licensing categories in New York, there's no lottery system for Processor Type 3 Branding licenses. The OCM accepts applications on a rolling basis, meaning there's no limit to the number of licenses that can be granted.
- Partnership opportunities: This license authorizes out-of-state brands and corporations to access the New York cannabis market as long as they partner with the state's licensed processors, allowing local businesses to enter into beneficial partner strategies and partnership ideas.
- Brand opportunities: With the Processor Type 3 Branding license, holders can cut production costs and step up efforts in other areas, such as reaching new customers, which can help them increase profits. This option also offers flexibility when creating products.
- Expertise from established cultivators and processors: By operating under this license, cannabis brands can be sure that their products are manufactured by reputable companies that offer premium quality at good prices.
- Lower start-up or expansion costs: Whether starting up or expanding into other markets, the Processor Type 3 Branding license is a good option for those who want to enter the market without having to invest in facilities or secure a formal site location for manufacturing or processing.
Costs Associated with Obtaining a Type 3 Branding License in NY
To obtain the Adult-Use Processor Type 3 Branding license in New York, you have to pay the following fees:
- Application fee: It's currently set at $1,000 and must be paid online at the time you submit your application through the NYBE portal.
- License fee: It's currently set at $2,000 and must be paid online only when the license is approved. Payment is required for the final license to be issued.
In New York, Social and Economic Equity (SEE) applicants enjoy a fee reduction, meaning they only have to pay 50% of those amounts. Both application and license fees are non-refundable.
To make your payment, you can use a credit card (limited to $5,000 only) or ACH for larger amounts.
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Final Thoughts: A Unique Option in the Cannabis Industry Licensing World
The Adult-Use Processor Type 3 Branding license can be an excellent option for cannabis enthusiasts who want to explore a growing market like New York. It provides unique opportunities, isn't subject to the same limitations, and allows entrepreneurs to start marketing cannabis products without a huge investment.
Do you think this licensing option is for you? Before you start your application, make sure you do your research and understand all the New York cannabis regulations. For more information, you can contact the OCM, visit its website, or check out the following resources:
