New York just told an equity licensee that it does not really own its own business. At its August 6, 2026 meeting, the Cannabis Control Board approved a declaratory ruling in the matter of Gotham Buds LLC, finding after review of the company’s operating agreements that the licensee did not maintain true day-to-day control — a direct application of the New York cannabis sole control requirement in 9 NYCRR § 116.4. Every operator who signed a services or management agreement with a well-capitalized partner should read this one carefully.

In this article

• What the New York cannabis sole control ruling says
• The predatory agreement problem, in a regulatory document
• The rest of the August meeting
• What to do about it
• Watch the full episode
• Original sources

What the New York cannabis sole control ruling says

Gotham Buds now has three options: submit revised agreements within 30 days, contest the findings at the next regularly scheduled Board meeting, or surrender the license. It has not lost the license. This is a declaratory ruling with cure rights, not a revocation — and that distinction matters if you see it reported otherwise.

The most interesting procedural wrinkle: the ruling arose from a request by Gotham Buds itself seeking clarity. This was not an OCM enforcement sweep. A licensee asked whether its structure passed muster, and the answer came back no.

John Kagia, Executive Director of the Office of Cannabis Management, tied it directly to the purpose of the program: “Sole Control is not just a technical requirement. It is how equity is delivered. This decision makes clear that the people these licenses were created for must have real authority over their businesses and a real stake in their success.”

Board Chair Jessica García framed it as an obligation rather than a punishment: “The Cannabis Control Board has a responsibility to ensure that the intent of New York’s equity program is upheld in practice. This ruling makes clear that equity licensees must maintain real control over their businesses. When that standard is not met, it is our role to step in, provide clarity, and protect the integrity of the program for all participants.”

The predatory agreement problem, in a regulatory document

Everybody in cannabis knows the pattern. A social equity applicant wins a license and has no capital. A well-funded operator offers to fund the build-out in exchange for a management agreement, a services agreement, a supply agreement and a security interest. On paper the equity holder owns the company. In practice someone else picks the vendors, sets the prices, hires the staff and takes the economics.

Sole control rules exist to stop exactly that, and they are usually enforced never. New York just enforced one. General Counsel Barbara Graves-Poller signaled the office is building capacity to do more of it: “The Board has given clear direction on how these regulations must be respected and enforced. Following that direction, the Office is strengthening its capacity to review business arrangements and protect the integrity of New York’s equity program.”

“Strengthening its capacity to review business arrangements” means somebody is going to read your operating agreement.

The rest of the August meeting

The Board approved 25 new adult-use licenses — 7 cultivator, 10 processor, 7 retail dispensary and 1 CAURD — bringing the statewide total to 2,322. It also approved 78 adult-use renewals, 9 CAURD renewals, 25 license amendments and 2 application denials. Of all licenses issued, 56% have gone to Social and Economic Equity applicants; among the 25 approved at this meeting, 62% went to SEE-owned businesses. There are now 705 legal dispensaries open statewide. The next Board meeting is September 3 in New York City.

What to do about it

If you hold an equity license in any state, pull your operating agreement and ask an uncomfortable question: if a regulator read this cold, would they conclude you control this business? Look at who can remove the manager, who signs vendor contracts, who controls the bank account, what happens on default, and whether any consent right effectively hands a veto to your funding partner.

New York is not the only state with a sole control rule — it is just the state that used one this month. And it is doing so while still expanding operator flexibility elsewhere, which suggests enforcement here is about program integrity rather than retrenchment.

Watch the full episode

Prefer to watch on YouTube? The Future of Dispensaries in Schedule III.

Original sources

• NYS OCM — New York Cannabis Regulators Reaffirm Regulations: Equity Owners Must Control Their Businesses
• NYS OCM — Cannabis Control Board August 6, 2026 meeting release
• The Marijuana Herald — CCB Approves 25 New Licenses, Total 2,322

This article is general information, not legal advice.