New York’s medical cannabis law, which is overseen by the New York Department of Health, requires pre-written approval from the Department for any ownership changes for businesses operating in the state’s MMJ market.
“Regulations prohibit a registered organization from changing the composition of its ownership without prior written approval of the Department of Health. MedMen and PharmaCann do not have approval from the department to conduct this transaction, and at this time the department has insufficient information to determine if approval can be granted.” — Jill Montag, New York Department of Health spokesperson
The hitch in the deal stems from New York‘s medical cannabis law, which prohibits cannabis businesses from owning or operating more than four dispensaries in the state.
MedMen already runs a high-end cannabis dispensary on Fifth Avenue in New York City and has also acquired the assets of Bloomfield Industries, which once operated throughout the state. PharmaCann has significant assets in New York as well, with dispensaries in Albany, the Bronx, and Central and Western New York. Their combined dispensary locations would exceed the limit.
Daniel Yi, spokesperson for MedMen, said the company was in talks with regulators and was confident of the outcome. “The first step in any acquisition is for the two parties to agree to the terms and enter into a binding contract,” said Yi. “Then you go seek approvals from all the relevant regulators. We have begun that process now.”
On Monday, MedMen announced that it would use “commercially reasonable efforts” to sell or shift ownership of any licenses that would prevent regulatory approval.
New York, however, is a valuable market — the state is in the process of developing an adult-use legalization bill that could create a lucrative recreational market within the next year.