The short answer
In New York, a true party of interest (TPI) is anyone with a financial or controlling interest in a cannabis license. That includes owners and many investors, and it can include vendors, landlords and managers. A goods or services provider becomes a TPI if its payments from a licensee in a calendar year exceed the greater of 10% of gross revenue, 50% of net profit or $250,000. Management services providers are presumed to be TPIs. A TPI can hold an interest in no more than three retail dispensaries, and no one can hold interests on both the retail and supply tiers.
Why TPI rules matter
The Office of Cannabis Management (OCM) uses TPI rules to see who really owns, funds and controls each licensee. TPIs must be disclosed, and OCM will not review an application until every TPI disclosure is in. TPI status then triggers New York's caps and its two-tier separation between retail and supply. A deal that makes someone a TPI by accident can block a license, push a person over the cap or put an existing license at risk.
Who is a true party of interest
OCM's retailer TPI guidance describes TPIs as the persons, individuals or entities, who have an interest in a cannabis license. In practice, look at four groups:
- Owners: anyone holding equity in the licensee, directly or through other entities
- Controllers: officers, directors, managers and anyone with the right to direct the business
- Financial interests: investors and lenders whose terms give them a financial or controlling interest
- Goods and services providers: vendors whose payments exceed the thresholds below, or whose arrangements give them control
The goods and services thresholds
A person who provides goods or services to a licensee becomes a TPI if its aggregate payments from that licensee in a calendar year exceed the greater of:
| Threshold | What it measures |
|---|---|
| 10% of gross revenue | Total payments compared with the licensee's gross revenue |
| 50% of net profit | Total payments compared with the licensee's net profit |
| $250,000 | Total payments in dollars |
The test uses aggregate payments, so all arrangements with the same provider count together: a lease, a management agreement and a supply contract with one party are added up. Some services are exempt under OCM's guidance; consulting, advisory and strategic services related to cannabis operations are not.
Management services providers are presumed TPIs
OCM's guidance states that management services providers are assumed to hold a financial or controlling interest. That makes them TPIs of each licensee they manage, which counts toward the three-retail cap and bars them from holding interests on the supply tier. This is the single most important rule for anyone offering or hiring management in New York.
Consultants and other non-exempt service providers face a related rule: a provider whose arrangements are based on revenue or profit may not serve licensees on both tiers. A provider may work across tiers only if every arrangement is a flat fee. That is why we structure New York work as flat-fee advisory and services where the licensee keeps control.
The three-license retail cap
Apart from passive investors, a person may have a financial or controlling interest in no more than three retail dispensary licenses. Passive investors, as OCM defines them, are not limited. Because TPI status can come from equity, control or payments, count every relationship, not just equity stakes, when you plan a portfolio.
Two-tier separation
- A person with an interest in a supply-tier licensee (cultivator, processor, distributor and related licenses) cannot hold any direct or indirect interest in a retail licensee, and the reverse is also true.
- A retail dispensary cannot lease from a supply-tier licensee or its TPIs.
- Retail licensees and their TPIs cannot have any interest in a registered organization (medical operator) or a registered organization with dispensing.
How common deals are treated
| Arrangement | TPI risk | How to reduce it |
|---|---|---|
| Equity investor with voting rights | TPI | Disclose; count toward the cap |
| Passive investor as OCM defines it | TPI, but not limited by the cap | Confirm the investor meets OCM's passive definition |
| Lender with a fixed interest rate | Depends on terms | Avoid conversion rights, profit shares and control covenants |
| Landlord with fixed market rent | Usually low | Keep rent fixed; check the landlord is not on the supply tier |
| Landlord with percentage rent | Higher | Payments may cross the thresholds; model them |
| Management company | Presumed TPI | Use flat-fee advisory and services with licensee control |
| Consultant on a flat fee | Lower, if payments stay under the thresholds | Keep fees flat and track total payments |
| Consultant paid a percentage of revenue | Higher; cannot serve both tiers | Convert to a flat fee |
| Brand or IP licensor with control over operations | Higher | Limit control; flat fees; check retail-branding rules |
This table is a planning aid, not a legal opinion. TPI status depends on the full facts and the current rules. Have counsel review every agreement before you sign.
Disclosure and changes
Applicants designate a responsible party to submit TPI disclosures, and OCM will not review the application until all of them are in. After licensing, changes in ownership or control, and new arrangements that create a TPI, require notice to or approval from OCM under its rules. Build TPI review into every new contract, lease and investment, and keep a running register of payments to each provider so you can see when one approaches a threshold.
TPI checklist
- List every owner, investor, lender, landlord, manager, consultant and major vendor
- For each, note equity, control rights and expected annual payments
- Add up all arrangements with the same party
- Compare each total with 10% of revenue, 50% of net profit and $250,000
- Flag anyone presumed to be a TPI, such as a management services provider
- Count each person's retail interests against the three-license cap
- Confirm no one holds interests on both tiers
- Confirm the landlord is not a supply-tier licensee or its TPI
- Convert percentage-based fees to flat fees where possible
- Have counsel review before signing and disclose before filing
Planning a portfolio under the cap
Owners who want more than one New York store need to plan TPI status across the portfolio, not deal by deal. Count every retail license in which each person has a financial or controlling interest, including interests that come from management, consulting or vendor arrangements. If an owner is approaching three, decide in advance which deals matter most, and structure advisory relationships as flat-fee services that do not create control. Keep the plan current: every new contract, investor or loan can change the count.
Questions to ask before signing any New York agreement
- Will this party receive payments, from all arrangements combined, that could exceed 10% of revenue, 50% of net profit or $250,000 in a year?
- Does the agreement give this party any right to direct operations, approve decisions or control money?
- Is this party, or anyone who owns it, on the supply tier?
- Does this party already have interests in other retail licenses?
- Does the agreement need to be disclosed before it takes effect?
Worked examples
These simplified examples show how the thresholds work in practice. They are illustrations only.
- A consultant paid a flat monthly fee that totals well under $250,000 a year, and under 10% of the store's revenue, generally stays below the goods and services threshold, but still counts if its arrangement gives it control.
- A landlord charging fixed rent of $180,000 a year, with no other arrangements, stays under $250,000. If the same landlord also lends the licensee money and takes a supply contract, all payments are added together.
- A manager paid 8% of revenue plus a share of profit would likely exceed a threshold in a strong year, and as a management services provider it is presumed a TPI anyway.
- An investor holding 20% of the licensee's equity with board seats is a TPI and counts toward the three-retail cap unless it qualifies as passive under OCM's definition.
Frequently asked questions
Does a TPI need to be approved, or only disclosed?
TPIs must be disclosed, and OCM reviews them as part of the application or change. Background and eligibility requirements apply to many TPIs.
Can a TPI of a retailer own a grow?
No. Under the two-tier rule, a TPI of a retail dispensary cannot have any interest in a supply-tier license.
What happens if a vendor crosses a threshold mid-year?
It becomes a TPI. Track payments monthly so you can restructure or disclose before that happens.
Are passive investors unlimited?
Passive investors, as OCM defines them, are not limited by the three-retail cap. The definition is narrow, so confirm with counsel.
Does the cap count licenses or stores?
It counts retail dispensary licenses in which a person has a financial or controlling interest.
Need help mapping a deal? Our entity, ownership and TPI structuring service works alongside your attorney. For how other states treat management, see management agreements in NY, MA, NJ and CT.
Related services and state guides
Sources
- OCM: Retailer true party of interest FAQ
- OCM: Supply-tier true party of interest FAQ
- OCM: Universal application FAQ
- Illinois Lawyer Now: New York TPI rules when a vendor looks like an owner (July 2026)
Last updated October 25, 2026. Rules change often. This guide is general information from operators, not legal or tax advice. Confirm current rules with the regulator and your attorney before acting.