Who is an owner? (Section 15003)
- Not new: Property interests: Persons who hold an “aggregate” (see below) ownership interest of 20 percent or more
- Not new: Corporate Managers: Officers, Directors, LLC Managers, Trustees
- New: Operations Managers: Any person who manages, directs, or controls the operations, including vice president, general manager or their equivalent.
- New: Entities: If an entity is an “Owner,” now only the individuals within the entity that “manage, direct, or control the operations of the commercial cannabis business” must be disclosed as “owners.” (Section 15003(b))
This is a significant narrowing of the prior rule, which required many layers of disclosure. Previously, (1) every entity had to be opened up to reveal its owners and its owners until individuals were left, and (2) all financial interest holders of owners had to be disclosed (what we liked to call the “Russian Doll Rule”). Now, that level of granularity is required only if the underlying individuals have actual direction, management, or control over the cannabis operations. Which means that non-directing, silent, investment-only, entity-“Owners” and FIH’s-of-Owners are no longer be required for disclosure as “owners,” even if the entity itself is properly disclosed as an “Owner.” This rule has a more logical nexus to the overall regulatory objective of disclosures and we celebrate this change. Hooray!
“Aggregate” means:
The total ownership interest held by a single person through any combination of individually held ownership interests in a commercial cannabis business and ownership interests in an entity that has an ownership interest in the same commercial cannabis business. For example, a person who owns 10 percent of the stock in a commercial cannabis business as an individual shareholder and 100 percent of the stock in an entity that owns 10 percent of the stock in the same commercial cannabis business has a 20 percent aggregate ownership interest in the commercial cannabis business. (Section 15003(a)(1))
