Do you have a killer brand idea for the cannabis industry? In New York, you can enter this promising market through a specialized permit known as "the branding license."
With the Adult-Use Processor Type 3 Branding license, you can promote your brand's cannabis products in the state's recreational sector. However, this option has some key distinctions—it doesn't 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 several options for adult-use cannabis licensing, but the Processor Type 3 Branding license is a unique aspect of the state's regulatory framework.
As we mentioned above, this license allows you to market cannabis products without the need to physically process them. If you're a Type 3 Branding license holder, you cannot engage in any plant-touching activities, including but not limited to:
- Cultivating
- Processing
- Extracting
- Blending
- Infusing
- Packaging
- Labeling
Under this license, you're solely authorized to partner with licensed processors who can manufacture your products. This is typically done through white-label cannabis agreements.
What Are White-Label Cannabis Agreements?
Essentially, white-label cannabis agreements are arrangements where a brand owner pays another licensed company to manufacture products that they'll then sell under their brand name.
What Activities Does This License Authorize?
As an Adult-Use Processor Type 3 Branding license holder, you can work with businesses that are authorized to handle cannabis plants, such as processors. The licensees you partner with can process, brand, and distribute cannabis products on your behalf.
Section 123.5 of Title 9 of the New York Code Rules and Regulations (NYCRR) specifies that processors may only enter into branding or white-label cannabis agreements with an entity that is already its true party of interest (TPI) or another licensee that isn't prohibited under the state's rules, making it difficult for independent or out-of-state brands to access the market without having an ownership stake in a local manufacturing facility.
The New York cannabis branding license helps you bypass such limitations by allowing you to enter into white-label arrangements without having to become a TPI in another licensed processor or establish manufacturing premises.
With the Adult-Use Processor Type 3 Branding license, you're also authorized to provide what your partners need to perform the plant-touching activities outlined in your white-label agreements. These are some examples:
- 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
You have the power to set the rules. To ensure your brand standards are met, you can establish specific production protocols for the processor to follow, including guidelines for the quality of your finished products and the manufacturing procedures used.
Limitations and Requirements
Both you and the licensed operator manufacturing products on your behalf must maintain detailed recordkeeping at every step of the process. Furthermore, as a Type 3 Branding license holder, you're subject to the same restrictions as processors, which include limitations on ownership, control, and relationships with other cannabis businesses. This means you cannot have any direct or indirect interest in dispensaries, consumption sites, delivery services, registered organizations (ROs), or laboratories.
Additionally, your Adult-Use Processor Type 3 Branding license is limited to the specific activities approved by the Office of Cannabis Management (OCM), and you cannot expand your 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 these 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 to 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 of age or older (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). If you operate as a sole proprietor and have no employees, you can use your Social Security Number (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, ROs, or laboratories.
- Be able to provide information on your brand's management, ownership, and finances, including your 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 enter the NY cannabis market without having to engage in the manufacturing or physical handling of marijuana or make a huge investment in infrastructure.
These are some of the business uses of the Type 3 Processor 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 enables you to partner with other businesses. You can produce or distribute your branded products through white-label arrangements.
- 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 sell innovative products to different audiences, expanding your business into new markets.
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Type 3 Processor License: Benefits
Besides the business opportunities mentioned above, the Adult-Use Processor Type 3 Branding license also gives you many advantages as a cannabis brand.
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 NY cannabis market as long as they partner with the state's licensed processors. If you operate a local business, this arrangement allows you to forge beneficial partnerships and strategies.
- Brand Opportunities: With the Processor Type 3 Branding license, you can cut production costs and step up efforts in other areas, such as reaching new customers, which can help you increase profits. This option also offers you flexibility when creating products.
- Expertise from Established Cultivators and Processors: When operating under this license, you can be sure that your 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 if you 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.
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 ideal 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 our blog posts for this state.
