What is the Type 3 Branding License?

Currently, hundreds of brands are partnered with processors in the state of NY, but there was no application window currently open for brands to apply for their own license. 

The Type 3 Branding License (not to be confused with the Type 3 Processing Flower License*) is a sub-license under the processor license category that allows brands to market their cannabis products in the New York adult-use cannabis market. This license does not permit brands to engage in plant-touching activities (such as extraction, manufacturing, blending, infusing, etc.). However, the license does allow for brands to enter into contracts with manufacturers, market their products, engage in sales, and other functions necessary to be successful as a brand in New York’s cannabis marketplace. 

How do licensees apply for a brand license?

Applicants will first need to create a business profile within New York’s Business Express System, where they will be able to access the application. Applicants will need to compile standard entity information related to their business including addresses, EINs, and NAICS code. They will also need to provide comprehensive information related to their shareholders, loans and financing, along with complete disclosures for all entities and individuals who will have an interest in the license. These disclosures are complex and often times result in deficiencies that delay applications and can result in the OCM voiding the application altogether.

Does the OCM require any application fees?

Yes, there is a non-refundable fee of $1,000 to submit the application, and should you receive a license, a $2,000 license fee per processing premise at which your brand is manufactured. 

Why should brands get their own license? 

Currently, most brands are operating as TPI's (learn about what a TPI is, here on the Growv Membership Portal*) on an existing processing license. There are many issues with this, including: 

1. Compliance Liability
   Any compliance violations, such as violating the marketing/advertising rules*, wholesale terms*, undue influence rules, etc., would fall on the processing license conducting the manufacturing and not the brand. This is a significant liability for processors, and compliance actions can result in fines or license revocation. 

2. Retail Advertising Specialties
   Each license can only provide $200.00 worth* of merchandise, signage, swag, etc., to a retailer in a calendar year. Once a brand holds their own licenses, they will no longer need to share that limit with the processor manufacturing their products.

3. Direct Sales & Marketing
   The Type 3 Brand License allows companies to engage in licensed activities, including sales and marketing of cannabis products. Without this license, brand representatives are not allowed to collect revenue directly from the sales of products and instead need to work through their manufacturer to collect payments from retailers. The license removes this sometimes messy and complicated step.

4. Flexibility

   Holding a license allows brands the flexibility of working with multiple manufacturers without the headaches of tracking TPI disclosure thresholders.

5. Owners Liability
   If a brand is operating as a TPI under the processing license conducting their manufacturing, all owners associated with the brand would be TPIs as well. This means that any disqualifications or reporting requirements related to TPIs would be the responsibility of the manufacturing processor. For example, the manufacturing processor would be responsible for reporting the arrest of a minority shareholder in one of the brands they co-pack for.