The licenses of New York’s medical cannabis companies – the only ten in the state – are largely owned by multistate operators. The ten licenses are also vertically-integrated, giving these companies a leg up when the adult-use market, which otherwise bans vertical integration, goes live. 

New York legalized medical marijuana in 2014 and created vertical licenses for operators, known as “registered organizations”. Most of New York’s 39 dispensaries are owned by nine companies that cloak their ownership by using corporate entities instead of people. 

Columbia Care, Curaleaf, Fiorello Pharmaceuticals, Inc./ Green Thumb Industries, MedMen, Inc., and PharmaCann’s Verilife are all owned by subsidiaries or holding companies. Other multistate operators, including iAnthus, Acreage, Cresco Labs and Vireo Health did not respond to media inquiries.

One company did list real humans as owners, Etain LLC, which has four dispensaries, located in New York City, Ulster, Onondaga, and Westchester, and one manufacturing facility in Warren.

Etain is owned by a family of three women, Hillary Peckham, Amy Peckham, and Keeley Peckham. Hillary Peckham, the Chief Operating Officer of the company, told Grown In that being one of the few women who applied and won a license was a challenge in itself. 

“We didn’t have peers that we could look to for help or guidance. That’s one of the many reasons we are invested in supporting other women in the cannabis industry,” Peckham said. 

In a 2019 testimony to the New York Assembly, Peckham said it had been difficult to gain access to capital while continuing to stay a women-owned business.

“Most major banks will not accept cannabis money and do not offer traditional lines of credit or debt financing. Those that do, do so at much higher interest rates and charge steep monthly compliance fees for maintaining bank accounts to keep up with additional FINCEN guidelines. With limited traditional startup financing, most cannabis companies are forced to turn to private investors or hedge funds that are generally headed by white male-owned corporate structures. Etain has consistently been put in positions making it immensely difficult to continue to support our business while staying true to our mission of being women-owned,” she said in her testimony.

New York legalized adult-use cannabis in March 2021 and created the Cannabis Control Board (CCB) and the Office of Cannabis Management, which will together regulate both medical and adult-use cannabis.

The incoming adult-use market is widely expected to look different from the current medical marijuana ownership landscape, as the law has a goal – not a requirement – of giving 50% of licenses to social equity applicants, defined as people from communities disproportionately impacted by the War on Drugs as well as minority- and women-owned businesses, certain veterans, and farmers.

“It’s vital that New York passed legislation with an initiative for diverse business ownership. That’s something Etain is very supportive of, especially trying to foster small business social equity licenses and minority- or women-owned business enterprises,” Peckham said. “As a woman-owned business, we hope to see more MWBEs in the [New York] market in the future.”

James Landau, an attorney at McCarthy Fingar LLP, said existing medical cannabis companies will be allowed to apply for two adult-use license types, one that consists of cultivator, processor, distributor, and retailer. The other consists of cultivator, processor, and distributor only.

In addition, for everyone that’s not a registered organization, the New York law limits individuals and entities to own up to three dispensaries or one combination of cultivator-processor licenses.

“The idea is to gear this to smaller businesses. For example, for the delivery licenses, we know that they're limiting the number of employees that a delivery license holder can have,” he said. “That would eliminate the Ubers of the world from coming in and snapping up a bunch of delivery licenses.”

But other issues loom. Stephanie Schuman, founder and principal attorney of Leaf Legal, P.C., said most adult-use applicants are preparing to apply for dispensary and social consumption lounge licenses since vertical integration is limited to microbusinesses. Planned microbusiness licenses would allow a grower to process and sell their own product on site – but CCB hasn’t decided yet if they can sell others’ products in their shop.

"The cannabis sold in our dispensaries and social consumption lounges will need to be acquired wholesale from within New York State," she said. "If we have all dispensaries and no cultivators, the shelves will be empty, an oversupply in Oregon, California, and elsewhere, notwithstanding. New York retailers will not be able to purchase out-of-state cannabis. I would encourage more cultivators to apply.”  

MSOs rule the medical marijuana landscape

iAnthus, a multi-state operator co-founded by tech millionaire Randy Maslow, owns 100% of registered operator Citiva Medical through its wholly-owned subsidiary ICM. Maslow was an executive at XO Communications and co-founded Internet Gaming Entertainment U.S.

iAnthus, which owns 10 cultivation and processing licenses in nine states, aims to “expand retail footprint within existing dispensary license portfolio”, in Florida, Massachusetts, Nevada, New Jersey, and New York. As a registered organization, iAnthus’ Citiva Medical has four dispensaries, one cultivation facility, and one processing facility, in New York, according to a 2020 Form 10-K.

iAnthus acquired Citiva Medical in 2018 for $24.8 million in cash and common shares, according to the Form 10-K.

Curaleaf, the nation’s largest cannabis company with over 100 dispensaries, also owns a medical, vertically-integrated license in New York. It has dispensaries in Newburgh, Plattsburgh, Queens, and Nassau and a 72,000 sq. foot cultivation and manufacturing facility in Ravena. 

New York cannabis company Fiorello Pharmaceuticals, Inc. is owned by GTI Core, LLC, a subsidiary of Green Thumb Industries. Fiorello’s three dispensaries and one manufacturing facility were acquired by Green Thumb industries in 2019, according to GTI’s 2019 annual report. The acquisition consideration was $42.6 million in cash and 1.7 million of the company’s subordinate voting shares, which were then valued at $14.1 million.

Limited medical patient options

New York’s medical program did not roll out perfectly from the get-go. The list of qualifying conditions has been limited, leading to decreased medical marijuana patient registrations. In March 2021, the New York State Department of Health added chronic pain as a qualifying condition, which led to an 18% increase in registered patients, according to the state. In 2018, PTSD and opioid replacement were approved as qualifying conditions. 

Still, there are fewer patients than expected when compared to other states. As of Dec. 7, 2021, there are 151,286 certified patients in New York and 3,462 registered practitioners. New York has 20,201,249 people, according to the 2020 Census, meaning only 0.7% of the population are medical marijuana patients. That’s a low number, compared to Michigan, where about 2.5% of the population are registered medical marijuana patients.

Until recently, medical patients were limited to vape cannabis products, not including whole flowers. On October 5, 2021 the Cannabis Control Board issued “programmatic enhancements” that included sale of whole flowers, a permanent waiver of the $50 patient and caregiver registration fee, and allowed physicians who prescribe controlled substances and have taken a specific state course to also issue medical marijuana patient registrations.

Share:

Cynthia Fernandez is a data reporter for Grown In. Previously, she was a politics reporter for Spotlight PA, a nonpartisan newsroom based in Harrisburg and reported at the Boston Globe. In 2019 she graduated...