Will P. Diddy Be Allowed to Operate In New York?

You'd have to live under a rock not to know that Sean Combs announced his intent to buy Cresco Labs and Columbia Care. But, will his newly acquired businesses be able to operate retail stores in New York, arguably the most important market in the world?

It looks like the answer is no.

The New York Dispensary Guidelines were released on 10/28, and they explicitly state that vertically integrated cannabis businesses will not be able to operate in New York. The New York State Department of Cannabis Management has (brilliantly IMO) broken up the supply chain. If you have a grow license, you cannot operate a retail store. If you own a processing facility, you cannot operate a retail store. This means that no multi state operators (MSOs) with vertical integration will be able to operate retail stores in New York. Read more in Green Market Report.

All of the assets that Sean Combs is in a deal to purchase are MSOs. Therefore, Combs will not be able to operate retail cannabis locations in New York State. In fact, none of the current MSOs that are operating in New York as medical dispensaries will be able to sell retail (adult-use/recreational) cannabis.

Of course, the deal is not finished and the current guidelines are not final yet. So, only time will tell. But, as of now, this move for New York keeps big business (even P. Diddy and maybe Cookies) out of retail cannabis.

So how will this affect cannabis business, marketing and branding?

A few predictions (for fun)

• Companies like Cresco, Trulieve, Curaleaf & MedMen that all have vertical integration, will create products and brands for sale in retail stores. They will reclassify in New York as "distributors." So, you might see MedMen branded products in retail stores, but MedMen stores will still be medical only.
• White label will be hot. If you already have a brand name (Edie Parker, Ken Ahbus, Tribe Tokes, Miss Grass) you're in luck! Partner with a distributor to create your branded products using their flower/extract and sell to retail stores.
• The medical market will remain healthy. In most states, once retail cannabis has been legalized, medical becomes an afterthought. With the larger companies, Diddy included, left out of the retail market, they will be encouraging the medical market.

I love what New York is doing. Kudos to Dasheeda Dawson and the team working on these rules. I can't wait to watch it evolve. But, it truly seems like New York will be different from states focused on strengthening MSOs. Sorry Diddy.