How to Prepare for Cannabis Licensing

We have talked at some length now about New York’s Marihuana Regulation and Taxation Act, the regulatory agencies created therefrom, the nine (9) licenses established within MRTA, some of the selection criteria, New York’s preference for SEE Applicants, their characteristics, and have touched on some of the powers and limitations of local municipalities but we have not yet discussed the licensing process, specifically how to prepare for a New York State Cannabis Application. This is because before you can start to prepare for the application, you must first understand the relevant rules and expectations.

A Cannabis application is first and foremost about two basic elements, who you and your company are and what you and your company propose to bring to the table. By presenting who you and your company are, you will be demonstrating whether you are a SEE Applicant, whether you and your company are of good moral character, that you understand that a cannabis license is a privilege not a right, and that you and your company are prepared to preform the functions for which a cannabis license would call for. In presenting what you and your company bring to the table you will be demonstrating what tangible and intellectual assets you can offer your community. You will be presenting not only a proposed commercial space and your proposed improvements both minor and/or major, but you will also be presenting your operational plan and your security plan, in other words you will be presenting your Standard Operating Practices.

Although Cannabis Applications tend to separate ones proposed Operational Plan and ones Security Plan, in preparing a company to participate within the Cannabis industry one should understand that there is actually quite a substantial amount of overlap between the two. Your operational plan will have much to do with running a structured and secure enterprise and your security plan will have much to do with operating a functional and free flowing experience. When presenting ones proposed commercial space and what you propose to build out within that space you, should be able to demonstrate how both your operational plan and security plan will synchronize.

Operational Plan

A Successful applicant will present within their operational plan a brief company summary, their executive team comprised of both owners and employees, their store location including the space’s square ft dimensions, the facilities within that space, the equipment to be used in operating the business as well as their inventory management systems which should always include the use of inventory management software preferably one designed for cannabis companies.

Security Plan

A Successful applicant will present within their security plan both tangible characteristics and intellectual. The tangible characteristics should include (among other things) their commercial space’s exterior space (e.g. exterior lighting, fencing, landscaping, dumpster and dumpster area precautions etc.), their commercial space’s exterior structure (e.g. entrance doors visible from street and/or parking lot, door integrity, window design and locks, whether vents and other opening are properly secured) their commercial space’s interior areas (e.g. well lit rooms, clear lines of sight and minimal blind corners, integrity of interior doors and windows etc.), as well as the proposed sensor alarm systems (e.g. entrance, storage, cash register and safe sensors, employee alarm system training etc.). The intellectual characteristics of ones security plan should include opening and closing procedures, cash management procedures, procedures and handling emergencies, general alarm procedures, employee work procedures, trash and waste management procedures.

Cultivator

Phases of Production

  • Germination of seeds, gendering plants, male/female, or feminized plants (10 weeks)
  • 1st stage: taking and rooting clones (2 weeks)
  • 2nd stage: clone/vegetation (1 week)
  • 3rd stage: vegetation (2 weeks)
  • 4th stage: flowering (8 weeks)
  • 5th stage: processing/trimming (3 days)
  • 6th stage: drying and curing (11 days)
  • Total elapsed time: approximately 15 weeks

Operating Plan

Cultivation Proposal: After completing the market research, start-up summary and financial plan portions of your business plan, you will be ready to discuss your facility, its approximate square footage, estimated plant count, break-down of seeds/clones and proposed layout.

Cultivation Facility:

Warehouse Layout: provides maximum control and generally results in the most reliable crop yields but often comes with the largest price tag. All grows will rely solely on artificial light, thus infrastructure costs will come at a higher price tag as your crops will rely solely upon your premises’ electrical capacity, HVAC systems, smart technology and air filtration, among other things.

Greenhouse Design: the primary advantage for the greenhouse approach to cultivation is the both the consistent availability of natural light as well as well as the system’s ability to control the natural light and blackout cycles. Although natural light is best for the seedling to mature plant cycle, blackout controls produce the best flowering yields.

Outdoor Cultivation: For larger acreage premises, outdoor cultivation will always be your most cost efficient and lowest barrier to entry method. As long as you have the land, traditional cultivation methods can help your company start the scaling process. Often used as an additional supplement in a larger cultivation strategy, outdoor cultivation can ensure success. Some of the obvious burdens outdoor cultivation will pose will of course be a lack of climate control, increased security costs, exposure to insects and other pests.

Transportation: Transportation and parking can be an often-underappreciated hurdle in the planning and licensing phase. Part of the licensing criteria shall look how your proposed business would affect traffic in the surrounding area. Understanding both state and local municipality requirements and restrictions can make or break a license application. Some unfortunate victims of this oversight have been forced to implement a busing shuttle service for their company’s consumers, a very costly mistake.

Noise Level Projections: Noise levels often break down to understanding your state’s zoning laws and categories as well as your facility’s layout and equipment. Obviously indoor growing will result in substantially lower noise levels than outdoor growing.

Tracking and Inventory Management:

Physical Security Plan

Cultivation Layout: Here you will need to identify all means of ingress and egress, location of cameras, their fields of view, all alarm systems (motion detectors, door sensors/controls/locks, panic alarms, sirens, etc.), control room location and integrity, restricted vs public areas

Guards and Third-Party Security: Will you be employing a third party security company, what will their hours of operation be, how will they surveil the premises and its boarders. What are some of the credentials of the third-party.

Perimeter Security: Cultivation will always bring the largest cost for perimeter security just do to the larger square footage of an average cultivation facility. Fencing, which will relate to fencing material, height, length, points of entry, whether their will be any gaps in the perimeter fencing. Video Surveillance, motion detectors, armed/unarmed guard surveillance during both operating and non-operating hours.

Fire Security: understanding your local municipalities building and fire codes is not just important to your security plan, its also a requirement for selection criteria. A comprehensive fire safety plan ranging from how your standard business practices will deter fires from occurring and how fires will be managed if one does occur are a must!

Processor License

Operating Plan

  • Extraction & Manufacturing Facilities: Here the square footage of the commercial space, the facility’s extraction and refining equipment, as well as an adequate electrical system to service said equipment is all central to the application process.
  • Extraction Technology/Equipment
    • C02 and/or Ethanol & Hydrocarbon Extraction: Equipment specifications, equipment capacity and processing method and main features (i.e. fully automated, approximate yield per hour, versatility, processing options/modes, etc.
  • Infused Products: Here a focus will be placed on the manufacturing rooms being enclosed and properly vented. Accessory rooms for cleaning and sanitizing, that will be equipped with soap dispensers and mechanical hand-drying devices, proper ventilation and being fully enclosed are also a must.
  • Employee Requirements and Training: Establishing minimal requirements for hiring as well as presenting your current staff, their training and credentials will set you apart in the application phrase. Preparing an employee handbook is just as important in an Processor operation as it is in any business. Structuring what is reasonably expected of your employees and how your management should respond to deviations from these expectations is all crucial.

Security Plan

  • Cultivation Layout: Here you will need to identify all means of ingress and egress, location of cameras, their fields of view, all alarm systems (motion detectors, door sensors/controls/locks, panic alarms, sirens, etc.), control room location and integrity, restricted vs public areas
  • Guards and Third-Party Security: Will you be employing a third party security company, what will their hours of operation be, how will they surveil the premises and its boarders. What are some of the credentials of the third-party.
  • Perimeter Security: Cultivation will always bring the largest cost for perimeter security just do to the larger square footage of an average cultivation facility. Fencing, which will relate to fencing material, height, length, points of entry, whether their will be any gaps in the perimeter fencing. Video Surveillance, motion detectors, armed/unarmed guard surveillance during both operating and non-operating hours
  • Fire Security: understanding your local municipalities building and fire codes is not just important to your security plan, its also a requirement for selection criteria. A comprehensive fire safety plan ranging from how your standard business practices will deter fires from occurring and how fires will be managed if one does occur are a must!

Distributor

  • Commercial Vehicle Inventory: Your company is your technology, and standard business practices which includes your employee requirements and employee training, as well as your inventory of commercial trucks. Their make, model, year, milage, and specs will be essential not just to preparing for the licensing process, but also for your start-up and financial projections. Buying new commercial vehicles is always a costly endeavor and often times we work with the inventory we have, not the inventory we want! Understanding the integrity of your commercial vehicle inventory and setting realistic expectations for maintenance and longevity is crucial in the planning phase.
  • Insurance:
    • General liability: Often you should prepare for an annual policy of at least two million ($2,000,000.00 USD) with one million ($1,000,000.00 USD) per occurrence, but this will of course depend upon jurisdictional requirements.
    • Auto-Insurance: policies covering bodily injury and property damage for events that arise out of or in connection to the Cannabis distribution industry is a must with policies usually covering at least one million ($1,000,000.00 USD) per occurrence.
  • Electronic Shipping Manifest and GPS Tracking
    • When entering the distribution sector of the cannabis industry, understand that the State is relying on your business for documentation and point of sales data more so than any other sector in the cannabis industry. Your company will be responsible to document what products you have picked up, those products corresponding THC concentration, the particular licensee that you have picked up from, as well as what products you distribute and to which licensee.
    • Completing and preserving an electronic shipping manifest at least 24 hours prior to delivery, so that you can document all distribution activities, is central to achieving and preserving licensure.
  • Taxation
    • Keep in mind, as a licensed distributor you will be responsible for charging the “end-user” licensee the appropriate tax for the corresponding products that you are distributing, there are different rates of taxation for distribution of raw cannabis flower, for concentrates and for edibles and you will be responsible to collect these taxes accurately.

Security Plan

  • Employee Requirements and Training: Preparing an employee handbook is just as important in distribution as it is in any business. Structuring what is reasonably expected of your employees and how your management should respond to deviations from these expectations is all crucial in building out a business where your employees are never all in the same place.
  • Guards and Third-Party Security: Will you be employing a third party security company to “ride along” with your drivers? What are some of the credentials of the third-party? Will these third party vendors be armed with the proper training and licenses, will these guards travel on all routes or only particular routes
  • Vehicle Security and Integrity: Are your vehicles armored, if not, what type of security features do they possess. What type of security systems do your vehicles possess and how will they be used in an cases of on road and in-house criminality which can range from outside hijacking and burglaries, to in-house employee theft and embezzlement.

Retail (Dispensary)

Operational Plan

  • Commercial Premises: As a dispensary and commercial space and its proposed layout will be the most important asset in the licensing process. Here you will disclose your physical address and its qualities. Everything from square footage of the commercial space, whether the property is a stand alone or whether it is adjoined to other structures, whether it is visible from the street, set back from high traffic intersections, is situated away from all relevant points of interest like school grounds, playgrounds, buildings of worship, etc. will all be crucial qualifying factors for licensure. Planning out your commercial space so that it is in compliance with State and local municipalities is a make-or-break element for any Retail Dispensary License.
  • Proposed Layout: Although Cannabis Applications tend to separate ones proposed Operational Plan from ones Security Plan, in presenting a Retail Dispensary Layout one must understand that they are completely synched. Every element of a Dispensary’s layout must promote traffic flow in a secured and structured process that is both seamless and muted to the consumer. Some of the more traditional layout designs are the Bank Model, the Pharmacy Model, the Mobil Model, and the Kiosk Model.
  • Inventory Management/ Software: Selecting a Cannabis inventory management software is not only a smart business choice its also relevant in the selection process as to who gets a license and who does not. Often times product is targeted for theft not only by consumers but also by ones own staff. Loose and sloppy inventory maintenance and reporting will all but guarantee theft. The second stated selection criteria for being approved a cannabis license is whether you can establish in your application that you will be able to maintain effective control over the illegal diversion of Cannabis! This means one of the primary factors your licensing authority is considering in granting a license, is whether you will remain in control of your inventory and how fast you will be able to prevent and respond to stolen products.
  • Transportation: Transportation and parking can be an often-underappreciated hurdle in the planning and licensing phase. Part of the licensing criteria shall look how your proposed business would affect traffic in the surrounding area. Understanding both state and local municipality requirements and restrictions can make or break a license application. Some unfortunate victims of this oversight have been forced to implement a busing shuttle service for their company’s consumers, a very costly mistake.
  • Noise Level Projections: Noise levels often break down to understanding your state’s zoning laws and categories as well as your facility’s layout and equipment. Obviously indoor growing will result in substantially lower noise levels than outdoor growing.

Security Plan

  • Vault/Safe Room Specs: Vault and safe rooms are a must for any successful application. Costs can vary considerably based on size and type. Some of the more common types are prefabricated vaults, masonry vaults, and metal/stub barrier mesh vaults. Often enough, Dispensary’s outgrow their vaults within the first three (3) years of operation!
  • Lighting: Detailing how your lighting system will illuminate dark areas and detect and recognize movement in protected areas as well as unprotected areas like outdoors, is all relevant selection criteria within the cannabis application process.
  • Guards and Third-Party Security: Will you be employing a third party security company, what will their hours of operation be, how will they surveil the premises and its boarders. What are some of the credentials of the third-party.

On-Site Consumption

Operating Plan

  • Although categorized as a low-barrier to entry licensee, presenting a clear and cohesive operating plan is crucial in the application process.
  • Location and Building Specifications: Everything from square footage of the commercial space, zoning as well as the surrounding businesses, whether the property is a standalone or whether it is adjoined to other structures, whether it is visible from the street, set back from high traffic intersections, is situated away from all relevant points of interest like school grounds, playgrounds, buildings of worship, etc. will all be crucial qualifying factors for licensure. Planning out your commercial space so that it is in compliance with State and local municipalities is a make-or-break element for any On-Site Consumption License
  • Employee Requirements and Training: Preparing an employee handbook is just as important in an On-Site Consumption/Coffee Lounge operation as it is in any business. Structuring what is reasonably expected of your employees and how your management should respond to deviations from these expectations is all crucial in building out a business where your employees will be balancing that delicate balance while promoting a fun and enjoyable atmosphere for your customers. Considerations ranging from over-serving as well as unlawful activities like contests, gambling and lewd behavior must be elements discussed in your training process.
  • Transportation: Transportation and parking can be an often-underappreciated hurdle in the planning and licensing phase. Part of the licensing criteria shall look how your proposed business would affect traffic in the surrounding area. Understanding both state and local municipality requirements and restrictions can make or break a license application. Some unfortunate victims of this oversight have been forced to implement a busing shuttle service for their company’s consumers, a very costly mistake.
  • Noise Level Projections: Noise levels often break down to understanding your state’s zoning laws and categories as well as your facility’s layout and equipment. Obviously indoor growing will result in substantially lower noise levels than outdoor growing.

Security Plan

  • Floor Plan: detailing entrances and exits as well as all other means of ingress and egress (i.e. windows, skylights, and roof hatches), cameras and their locations and corresponding fields of view as well as the location of all alarm inputs (i.e. door contacts, motion detectors, panic alarms, alarm sirens, etc.)
  • Lighting: Detailing how your lighting system will illuminate dark areas and detect and recognize movement in protected areas as well as unprotected areas like outdoors, is all relevant selection criteria within the cannabis application process.
  • Guards and Third-Party Security: Will you be employing a third party security company, what will their hours of operation be, how will they surveil the premises and survey premise’s population. What are the credentials of the third-party.
  • Customer Access: parking, procedure for customer entry, areas accessible to customers, areas inaccessible to customers.
  • Fire Security: understanding your local municipalities building and fire codes is not just important to your security plan, its also a requirement for selection criteria. A comprehensive fire safety plan ranging from how your standard business practices will deter fires from occurring and how fires will be managed if one does occur are a must!
  • Surveillance: Video Surveillance, motion detectors, control room placement and specifications, electronic security systems, burglar alarm systems

Microbusiness & Small Business Co-Operatives

Operating Plan

  • Cultivation Proposal: After completing the market research, start-up summary and financial plan portions of your business plan, you will be ready to discuss your facility, its approximate square footage, estimated plant count, break-down of seeds/clones and proposed layout.
  • Cultivation Facility:
  • Warehouse Layout: provides maximum control and generally results in the most reliable crop yields but often comes with the largest price tag. All grows will rely solely on artificial light, thus infrastructure costs will come at a higher price tag as your crops will rely solely upon your premises’ electrical capacity, HVAC systems, smart technology and air filtration, among other things.
  • Greenhouse Design: the primary advantage for the greenhouse approach to cultivation is the both the consistent availability of natural light as well as well as the system’s ability to control the natural light and blackout cycles. Although natural light is best for the seedling to mature plant cycle, blackout controls produce the best flowering yields.
  • Outdoor Cultivation: For larger acreage premises, outdoor cultivation will always be your most cost efficient and lowest barrier to entry method. As long as you have the land, traditional cultivation methods can help your company start the scaling process. Often used as an additional supplement in a larger cultivation strategy, outdoor cultivation can ensure success. Some of the obvious burdens outdoor cultivation will pose will of course be a lack of climate control, increased security costs, exposure to insects and other pests.
  • Extraction & Manufacturing Facilities: Here the square footage of the commercial space, the facility’s extraction and refining equipment, as well as an adequate electrical system to service said equipment is all central to the application process.
  • Extraction Technology/Equipment
    • C02 and/or Ethanol & Hydrocarbon Extraction: Equipment specifications, equipment capacity and processing method and main features (i.e. fully automated, approximate yield per hour, versatility, processing options/modes, etc.
  • Infused Products: Here a focus will be placed on the manufacturing rooms being enclosed and properly vented. Accessory rooms for cleaning and sanitizing, that will be equipped with soap dispensers and mechanical hand-drying devices, proper ventilation and being fully enclosed are also a must.
  • Employee Requirements and Training: Establishing minimal requirements for hiring as well as presenting your current staff, their training and credentials will set you apart in the application phrase. Preparing an employee handbook is just as important in an Processor operation as it is in any business. Structuring what is reasonably expected of your employees and how your management should respond to deviations from these expectations is all crucial.

Physical Security Plan

  • Cultivation Layout: Here you will need to identify all means of ingress and egress, location of cameras, their fields of view, all alarm systems (motion detectors, door sensors/controls/locks, panic alarms, sirens, etc.), control room location and integrity, restricted vs public areas
  • Guards and Third-Party Security: Will you be employing a third party security company, what will their hours of operation be, how will they surveil the premises and its boarders. What are some of the credentials of the third-party.
  • Perimeter Security: Cultivation will always bring the largest cost for perimeter security just do to the larger square footage of an average cultivation facility. Fencing, which will relate to fencing material, height, length, points of entry, whether their will be any gaps in the perimeter fencing. Video Surveillance, motion detectors, armed/unarmed guard surveillance during both operating and non-operating hours.
  • Fire Security: understanding your local municipalities building and fire codes is not just important to your security plan, its also a requirement for selection criteria. A comprehensive fire safety plan ranging from how your standard business practices will deter fires from occurring and how fires will be managed if one does occur are a must!