Cannabis Licensing Glossary

280E

The section of the federal tax code that bars businesses trafficking in Schedule I or II controlled substances from deducting ordinary business expenses. It still applies to adult-use cannabis businesses and sharply raises their effective tax rate. Learn more

Adult-use

Cannabis sold to adults 21 and older without a medical recommendation. Also called recreational.

Annual license (New Jersey)

A full New Jersey cannabis license issued to applicants who have a site, municipal approval and all required materials. Learn more

Application window

The period when a regulator accepts applications for a license type. Some states accept applications on a rolling basis instead. Learn more

Backer (Connecticut)

A person with a financial interest in, or managerial control of, a Connecticut cannabis applicant or licensee, who must complete a backer application. Learn more

Buffer zone

A minimum distance a cannabis business must keep from sites such as schools, houses of worship or parks. Learn more

Cannabis Control Board (CCB)

New York's board that votes on licenses, regulations and location requests at public meetings. Learn more

Cannabis Control Commission (CCC)

The regulator in Massachusetts and, separately, in Rhode Island. Learn more

Cannabis Regulatory Commission (CRC)

New Jersey's cannabis regulator. Learn more

CAURD

Conditional Adult-Use Retail Dispensary. New York's first retail licenses, reserved for justice-involved owners with business experience and qualifying nonprofits. Learn more

Change of ownership

A transfer of equity or control in a licensee. Most states require regulator approval before it takes effect. Learn more

Community impact fee

A payment to a host community under a host community agreement. In Massachusetts it is capped at 3% of gross sales and must relate to the town's actual costs. Learn more

Community outreach meeting

A public meeting where an applicant presents plans to residents, required before applying in some states. Learn more

Conditional license

A temporary license that lets an applicant secure a site and approvals before receiving a final license, usually with a deadline. Learn more

Consumption area endorsement

A New Jersey add-on that lets a retailer offer on-site consumption where the town allows it. Learn more

Control

The power to direct a cannabis business's management or policies, whether through equity, voting rights, contracts or decision rights. Many caps and disclosures turn on control, not just ownership. Learn more

Conversion license

A license that lets an existing medical operator, or a conditional licensee, move to a new status, such as adult-use sales or an annual license.

Craft Marijuana Cooperative

A Massachusetts license for a cooperative of growers. Learn more

Cultivator

A license to grow cannabis, usually tiered by canopy size. Learn more

Deficiency letter

A regulator's notice that an application is missing information or needs correction. A slow or incomplete answer delays review. Learn more

Delivery license

A license to deliver cannabis to consumers, standalone or attached to a retailer, depending on the state. Learn more

Distributor

A supply-chain license to buy, sell or transport cannabis between licensees.

Dual use (Virginia)

A license for existing medical pharmaceutical processors to serve the adult-use market. Learn more

Economic Empowerment applicant

A Massachusetts priority applicant category tied to communities disproportionately harmed by enforcement. Learn more

Equity joint venture (EJV)

A Connecticut path in which an existing operator partners with a social equity applicant, licensed outside the lottery and subject to review. Learn more

Financial source agreement

A New Jersey term for an agreement in which a party provides financing to a licensee. The CRC prohibits unfair terms. Learn more

Gross margin

Net sales minus cost of goods sold, divided by net sales. Learn more

Host community agreement (HCA)

An agreement between a cannabis business and its municipality setting out local commitments and payments, required in some states. Learn more

Hybrid retailer

A retailer licensed to sell both adult-use and medical cannabis, as in Connecticut and Rhode Island.

Impact licensee (Virginia)

Virginia's social equity category. Impact licensees must be at least 51% owned and controlled by qualifying individuals. Learn more

Impact zone (New Jersey)

A New Jersey municipality designated as disproportionately harmed by cannabis enforcement. Impact zone businesses receive priority. Learn more

Labor peace agreement

An agreement between an employer and a labor organization, required for licensing in several states.

License cap

A limit on how many licenses one person or company may hold an interest in, or on how many licenses a state issues. Learn more

Limited access area

A part of the premises, such as the vault or receiving, that only authorized staff may enter. Learn more

Lottery

A random drawing used to award licenses when qualified applicants outnumber licenses. Learn more

Management services agreement (MSA)

A contract under which an outside company runs some or all of a licensee's operations. Regulators review MSAs for control and fairness. Learn more

Manifest

The record of a transfer of cannabis between licensees, accepted or rejected in the seed-to-sale system. Learn more

Metrc

A seed-to-sale tracking system used by many states, including New York since its switch from BioTrack at the end of 2025. Learn more

Microbusiness

A license for a small business to carry out several activities, such as growing, processing and selling, within size limits. Learn more

Mock inspection

A full practice inspection run the way the regulator runs it, with a fix list. Learn more

MRTA

New York's Marihuana Regulation and Taxation Act of 2021, which legalized adult-use cannabis. Learn more

Municipal opt-out

A local decision to prohibit some or all cannabis businesses.

Notice to municipality

In New York, a required notice to the municipality or community board 30 to 270 days before filing a retail application or location. Learn more

OCM

New York's Office of Cannabis Management, which licenses and regulates cannabis. Learn more

On-site consumption

A license or endorsement allowing customers to consume cannabis at the premises. Learn more

Passive investor

An investor without control, as defined by the state. In New York, passive investors are not limited by the three-retail cap. Learn more

PCA (public convenience and advantage)

New York's process for asking the Cannabis Control Board to approve a retail location inside the normal distance from another dispensary. Learn more

Pre-opening inspection

The regulator's inspection of a store before it can open. Learn more

Processor

A license to process cannabis into products such as concentrates, edibles or pre-rolls. Learn more

Provisional license

A license issued before a site or final approval, with conditions to meet before opening.

Proximity rule

A minimum distance between two cannabis businesses of the same type. Learn more

Purchase limit

The most cannabis a customer may buy in a transaction or day. Massachusetts raised its limit to two ounces of flower in 2026.

Reconciliation

Comparing on-hand inventory with the seed-to-sale record and explaining every difference. Learn more

Registered organization (RO)

A New York medical cannabis operator. An ROD is a registered organization with dispensing.

Rolling applications

Applications accepted at any time, rather than in a fixed window.

Seed-to-sale

A tracking system that records each plant and package from cultivation to sale. Learn more

Shrink

Inventory lost or unaccounted for, through theft, damage or errors. Learn more

Social and economic equity (SEE)

New York's equity program, with a goal of awarding half of licenses to qualifying applicants. Learn more

Social Equity Council

Connecticut's body that sets social equity criteria and reviews equity applicants. Learn more

Social equity program

A state program that reserves licenses, reduces fees or gives priority to people from communities harmed by enforcement. Learn more

SOP

Standard operating procedure: a written routine for a task such as receiving, sales or waste. Learn more

Strawman ownership

Listing a qualifying person as owner while someone else actually controls the business. Some states make it a crime. Learn more

Supply tier

Licenses that grow, process or distribute cannabis, as opposed to retail. New York separates the two tiers. Learn more

THC-based tax

A tax charged by the amount of THC in a product rather than its price, as in Connecticut. Learn more

True party of interest (TPI)

Anyone with a financial or controlling interest in a license, as defined by the state. TPIs must be disclosed and count toward caps. Learn more

Two-tier system

New York's separation of retail from the supply tier: no one may hold interests in both. Learn more

Vertical integration

Owning licenses across the supply chain, from cultivation to retail. Some states allow it; New York largely does not.

Worker-owned cooperative (Rhode Island)

A business owned by its workers. Rhode Island reserves a retail license for one in each zone. Learn more

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