N.Y. Comp. Codes R. & Regs. tit. 9 § 124.4

Current through Register Vol. 46, No. 45, November 2, 2024

Section 124.4 - Agreements Creating Financial or Controlling Interest

(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.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 124.4

Adopted New York State Register September 27, 2023/Volume XLV, Issue 39, eff. 9/27/2023