New York Codes, Rules and Regulations
Title 9 - EXECUTIVE DEPARTMENT
Subtitle B - Division of Alcoholic Beverage Control
Chapter II - Rules of the Office of Cannabis Management
Part 124 - General Business Requirements and Prohibitions
Section 124.4 - Agreements Creating Financial or Controlling Interest
Universal Citation: 9 NY Comp Codes Rules and Regs ยง 124.4
Current through Register Vol. 46, No. 39, September 25, 2024
(a) The Office reserves the right to review any agreement between a licensee and a third party or between two licensees. A person will be deemed to be a true party of interest by virtue of their financial or controlling interest in a license where it enters into any agreement that:
(1) compels a licensee to
promise not to purchase or sell cannabis, cannabis products, or other goods,
services, or materials to or from applicants, licensees, or other
businesses;
(2) is not bargained
for between the parties in an arms-length transaction;
(3) does not include the ability for either
party to terminate the agreement with due notice;
(4) generates a share of revenue paid by a
licensee in excess of the greater of:
(i) 10%
of gross revenue of such applicant or licensee,
(ii) 50% of net profit of such applicant or
licensee, or
(iii) $250,000, in one
calendar year based on actual or anticipated annual performance;
or
(5) Where a goods and
services provider violates the financial interests and controlling conduct
prohibitions set forth in this Part, the Office may terminate that party's
interest in the license and recommend a civil penalty to be imposed by the
Board and collected by the Office.
(b) A goods and services provider under this section shall be a true party of interest to the license to which it is providing such goods or services if, over the course of a calendar year, they receive the right to or actual payment from the licensee, exceeding the greatest of:
(1) 10% of a licensees' gross
revenues;
(2) 50% of a licensees'
GAAP net profits;
(3) $250,000;
or
(4) if such person qualifies as
a true party of interest by any other means in this Part.
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