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Cannabis license sellers in New York run up against TPI rules

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The New York cannabis industry is finally starting to gain momentum, but some licensees are already ready to get out.

The reasons for exist run the gamut from founder fatigue after two years of struggling to desire to just be a license flipper. But no matter the reason, they all run up against the TPI wall.

The true parties of interest, or TPI, provision was an attempt by state regulators to to ensure transparency, fairness and compliance within the industry. These rules were aimed at preventing monopolization, licensing of illicit operators and conflicts of interest. They also wanted encourage small business owners, particularly minority and social equity owners.

However, the rules have also challenged those who want to create wealth by selling versus operating a business. New York regulators have set about revising the rules in response to the concerns, but for now, the landscape remains confusing for sellers.

Adding to that confusion, the state issued a guidance document regarding TPI rules, but it has some discrepancies with the law as it is written, according to one lawyer.

Understaffed

The New York Office of Cannabis Management has acknowledged being understaffed and overwhelmed by the volume of license applications and requests around TPI. To address the issue – at least somewhat – the agency has allowed companies to name new TPIs as long as they stay under 49% ownership. Applicants can fill out a survey online, and the OCM will eventually review the request.

Jeff Schultz, a partner with law firm Foley Hoag, noted that the TPI survey is a big improvement, but it is also plagued with problems.

“The good news is that they are now allowing these things to happen, whereas you just couldn’t do it before and no one was going to, no one was going to get funded and no one was going to get bought out,” Schultz said.

The bad news, he said, is that the online portal is buggy and shuts on and off randomly, and while it allows a licensee to add a new TPI, it doesn’t actually mean the OCM has approved them.

“The survey discloses a new TPI with the caveat that the OCM may not get around to approving or denying a new TPI for an indefinite period of time. An indefinite period of time is not a great thing,” Schultz said.

In addition, licensees take on great risk by taking this path. “If six months from now the OCM comes back and says, ‘We’re denying this person as a TPI on your license,’ you have to deal with the consequences. That could be unwinding a transaction,” he added.

Unwinding deals in cannabis can be very complicated, especially with regard to pricing assets.

Some people might be willing to take that risk, because they need or want the money right away. Or worst case scenario, Schultz mused, a 49% owner could invest $500,000 and take over the operation and run it into the ground. If that new entity puts the company $20 million in debt and doesn’t get approval, they can walk away and leave the original licensee a diminished company and a requirement to return the investment dollars.

Guidance document

In order to help applicants understand the TPI issue, the OCM created a guidance document. However, according to Schultz, the document itself is problematic, starting with language that conflicts with the actual written law.

Specifically, the MRTA and regulations clearly state a license can be transferred.

“There are 20 references in the MRTA and the regulations that either directly or indirectly reference a transfer of the license, not transfer of the equity of the owner of the license. Very, very different and there are multiple reasons why that needs to be permitted,” he said.

“Then you have the guidance document, which is not law, that has a question in the Q&A section asking can you transfer a license from one entity to another? The answer is definitively no. People want to know what they can do.”

Schultz said he knows several parties that have received licenses not realizing the impact that a cannabis license could have on their main noncannabis businesses.

“They have to get out of it because the 280E tax situation is radioactive for their traditional business,”  Schultz said. However, the guidance document explicitly tells potential buyers that they can’t do a deal.

CAURD sellers

Selling is even trickier when it comes to justice-involved CAURD (conditional adult-use retail dispensary) licensees. Their only option is to sell 49% and give that party an option to buy it completely four years after the date of the issuance of the license at a predetermined price. Schultz said deals like that are happening, and in those cases, the justice-involved applicant is usually put on a salary because they are technically still supposed to have sole control.

Schultz, however, believes that a justice-involved licensee can sell to another justice-involved licensee. “I could see where Housing Works could buy another CAURD license and increase their footprint,” he said.

Further complicating the issue of selling licenses is that social and economic equity (SEE) licensees, such as those for women-owned businesses, can’t sell for three years unless it’s to another women-owned business.

Debts and taxes

Running these cannabis businesses has been very difficult, and many are in danger of failing already, with taxes owed and huge debts on their books.

“Most buyers don’t want the tax bill or the debt. However, the sellers can’t sell to pay off the creditors, and so they are forced into receivership and that’s expensive,” Schultz said. “Why not just let them monetize their license out of court, sell a f***ing license and pay off, and all the people that are owed money are part of our ecosystem? That’s a better solution.”

The OCM didn’t respond to several requests to discuss TPI rules and regulations.



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Nebraska medical cannabis regulations stall in legislative committee

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A Nebraska legislative committee voted 5-3 against advancing a bill designed to implement and regulate the state’s medical cannabis program, leaving legislators and advocates searching for alternative paths forward, according to the Nebraska Examiner.

The General Affairs Committee rejected Legislative Bill 677, sponsored by State Sen. Ben Hansen of Blair, during a Thursday vote where committee members declined to offer amendments to the legislation, the publication reported.

“I don’t want to shut all the doors right now, but some doors are closing, and they’re closing fast, and so we have to act,” Hansen told reporters after the vote, according to the Examiner.

Nebraska voters approved medical cannabis in November 2024, with residents legally permitted to possess up to 5 ounces with a healthcare practitioner’s recommendation since mid-December. However, the regulatory commission created by the ballot initiative lacks effective power and funding to regulate the industry.

Hansen described his legislation as “a must” for 2025 to prevent a “Wild West” scenario in the state’s cannabis market. The bill would have expanded regulatory structure through the Nebraska Medical Cannabis Commission and extended deadlines for regulations and licensing to allow more time for implementation, the Examiner noted.

Committee disagreements centered on proposed restrictions. A committee amendment would have prohibited smoking cannabis and the sale of flower or bud products while limiting qualified healthcare practitioners to physicians, osteopathic physicians, physician assistants or nurse practitioners who had treated patients for at least six months.

The amendment also would have limited qualifying conditions to 15 specific ailments including cancer, epilepsy, HIV/AIDS, and chronic pain lasting longer than six months.

State Sen. Bob Andersen of Sarpy County opposed allowing vaping due to concerns about youth drug use, while committee chair Rick Holdcroft suggested selling cannabis flower would be “a gateway toward recreational marijuana,” a claim Hansen “heavily disputed,” according to the Examiner.

Hansen now faces a difficult path forward, requiring at least 25 votes to pull the bill from committee and then needing 33 senators to advance it across three rounds of debate, regardless of filibuster attempts.

Crista Eggers, executive director of Nebraskans for Medical Marijuana, remained optimistic despite the setback.

“This will not be the end,” Eggers said, according to the outlet. “Giving up has never been an option. Being silenced has never been an option. It’s not over. It’s not done.”

The legislative impasse is further complicated by ongoing litigation. Former state senator John Kuehn has filed two lawsuits challenging the voter-approved provisions, with one appeal pending before the Nebraska Supreme Court. The state’s Attorney General is also trying to do something about the hemp question, akin to other states across the country.



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One of Las Vegas’ cannabis lounges closes its doors

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Nevada’s cannabis lounge experiment faces some expected growing pains, with one of just two state-licensed venues closing its doors after barely a year in business, according to the Las Vegas Weekly.

“The regulatory framework, compliance costs and product limitations just don’t support a sustainable business model,” said Thrive Cannabis managing partner Mitch Britten, who plans to convert the space into an event venue until regulations loosen up.

The closure leaves Planet 13’s Dazed Consumption Lounge as the only operational state-regulated cannabis lounge in Nevada. Dazed manager Blake Anderson estimates the venue attracts around 250 customers daily, primarily tourists. One other establishment, Sky High Lounge, has operated since 2019 on sovereign Las Vegas Paiute Tribe land exempt from state regulations.

Even with Nevada regulators conditionally approving 21 more lounge licenses, potential owners are struggling to meet the $200,000 liquid assets requirement – particularly social equity applicants from communities hit hardest by prohibition.

Recreational marijuana has been legal statewide since 2017, but public consumption remains prohibited. That’s created an obvious disconnect for the millions of tourists who visit Las Vegas annually but have nowhere legal to use the products they purchase. The state recorded roughly $829 million in taxable sales during the 2024 fiscal year.

“It always comes down to money, and it’s difficult to get a space if you can’t afford to buy a building. On top of that, getting insurance and finding a landowner who’s willing to lease to a cannabis business is a challenge in and of itself,” said Christopher LaPorte, whose consulting firm Reset Las Vegas helped launch Smoke and Mirrors, told Las Vegas Weekly.

Many think the key to future success lies in legislative changes that would allow lounges to integrate with food service and entertainment – playing to Las Vegas’s strengths as a hospitality innovator. In the meantime, the industry will continue to adapt and push forward.

“Things take time,” LaPorte said. “There’s a culture that we have to continue to embrace and a lot of education that we still have to do. But at the end of the day, tourists need a place to smoke, and that’s what these places are.”



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Psyence Group consolidates its shares

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Psyence Group Inc. (CSE: PSYG) told investors that it will be consolidating all of its issued and outstanding share capital on the basis of every 15 existing common shares into one new common share effective April 23, 2025 with a record date of April 23, 2025. As a result of the consolidation, the issued and outstanding shares will be reduced to approximately 9,387,695 on the effective date.

This is the second time a Psyence company has consolidated shares recently. In November, its Nasdaq-listed associate, Psyence Biomedical Ltd. (Nasdaq: PBM), implemented a 1-for-75 share consolidation as the psychedelics company worked to maintain its Nasdaq listing.

Psyence Group reported earnings in February when the company delivered a net loss of C$3 million and was reporting as a going concern. At the end of 2024, the company said it had not yet achieved profitable operations, has accumulated losses of C$48,982,320 since its inception.

Total assets at the end of 2024 were C$11,944,478 and comprised predominantly of: cash and cash equivalents of C$10,611,113, other receivables of C$159,808, investment in PsyLabs of C$1,071,981 and prepaids of C$68,243.

Still, the company is pushing ahead. Psyence told investors that it has historically secured financing through share issuances and convertible debentures, and it continues to explore funding opportunities to support its operations and strategic initiatives. “Based on these actions and
management’s expectations regarding future funding and operational developments, the company believes it will have sufficient resources to meet its obligations as they become due for at least the next twelve months,” it said in its last financial filing.

The company said it believes that the consolidation will position it with greater flexibility for the development of its business and the growth of the company.

 



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