Cannabis Brands Beware – Branding/White Labeling in New York Requires Application Submittal by December 18, 2023 | Foley Hoag LLP – Cannabis and the Law
While licensing agreements between brands and license holders are typical in mature cannabis jurisdictions, what is uncommon is the requirement that said brands become licensed solely for the purposes of entering into branding and licensing agreements with in-state licensed operators, but that is exactly what New York and the Office of Cannabis Management (“OCM”) have required and made plain. More so, those brands must apply for that license by December 18 in order to enter into such agreements with cultivators and/or producers moving forward.
New York, like many other states, have different processing licenses for different segments of the processing supply chain. New York has a tiered approach, with three (3)different types of processing licenses. Type 3 Processors are for those seeking to package, label, and/or engage in branding, including those simply entering into white labeling agreements only. Type 2 Processors are those looking to infuse and blend, in addition to those activities permitted under Type 3. And Type 1 Processors are those looking to do extracting, in addition to Types 2 and 3.
One area of ambiguity was both whether brands would be required to submit applications for Type 3 Processing Licenses, and how. Indeed, one of the threshold requirements of applicants for any processing license was site control, with OCM previously making plain in guidance that all such applicants were required to have site control designated in the application, suggesting that only operating companies within the State were required to apply.
However, OCM has subsequently clarified through updated guidance and public statements that no formal site control is required for brands and that they are, in fact, required to apply for a Type 3 Processing License simply to brand and/or white label within the New York market. In particular, updated guidance identified that:
[a]pplicants applying for a Type 3 Processor licensing for branding purposes only may enter their entity address as their “facility location address” in the application. All other Type 3 Processor applicants (for any and all packaging and labeling that will be handling cannabis in New York State) must apply with a suitable facility location.
Director of Policy at the OCM, John Kagia, reiterated the requirement for brands to become licensed in a recent media interview. In particular, he identified that “[t]he type three license is the white labeling license[, which] doesn’t allow you to process or to manufacture, but it does allow you to essentially put your label on a product that has been produced and sell it onto the market.” He recognized that “it is a departure form the way brands have operated to this point,” but conceded, similar to the guidance identified above, that “[y]ou don’t need a manufacturing location, like you would need for type-one or type-two license[s],” and instead, “you really just need to submit the location where your business is registered.”
The current application round closes on December 18, 2023 at 5:00 P.M. While there will be future application rounds, there is no set schedule or cadence for doing so. In short, brands must apply for the Type 3 Processing license by no later than December 18 in order to enter into the New York market.
