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New York cannabis regulators are attempting to oust a licensed operator from the adult-use marketplace whom they’re accusing of “aiding and abetting” in unlicensed processing activity through a reverse licensing scheme.
The state’s Office of Cannabis Management (OCM) filed multiple charges Oct. 20 against Omnium Health Inc. (d/b/a Omnium Canna), a licensed adult-use processor and distributor in Long Island.
The OCM claims that a February 2025 investigation uncovered contracts between Omnium and unlicensed operators whom Omnium charged rent, allowing them to use its facilities and resources to manufacture and package cannabis products that landed on licensed dispensary shelves as part of a “rent-a-license” scheme.
“Omnium’s alleged conduct is a blatant breach of the licensing rules designed to ensure transparency and fairness in the legal market,” OCM Executive Deputy Director Felicia A. B. Reid said in an Oct. 20 press release. “Our state’s cannabis laws are clear: Licenses are not transferable and only licensed operators may produce and distribute cannabis. OCM’s move today ensures that regulated businesses do not exploit loopholes or take advantage to undermine legal operators who play by the rules.”
In filing a notice of pleading, OCM is attempting to revoke Omnium’s licenses and prevent the company from applying for future licensure.
The state’s regulators are also seeking civil penalties related to the projected revenue from the sale or possession of any unregulated cannabis products, as well as the recall and destruction of those unregulated products.
“Omnium’s actions violated core principles of our regulatory framework and placed unvetted operators into the heart of New York’s legal market,” said Stephen Geskey, OCM deputy executive director of labs, compliance and licensing. “This is a textbook example of reverse licensure, and OCM will not tolerate it.”
The possibilities of “reverse licensure” in New York’s adult-use cannabis market are exacerbated by the state’s delay in implementing a third-party seed-to-sale tracking system nearly three years after adult-use dispensary sales launched in December 2022.
The OCM plans to integrate track-and-trace provider Metrc’s software and technology into the state’s adult-use program by Dec. 17 for all licensees. Access to Metrc’s application programming interference (API) and testing endpoints will be available on Oct. 12 for operators to begin the transition.
The majority of state cannabis programs have a third-party provider, like Metrc or BioTrack, to help prevent product diversion or inversion. Without a system in place, former New York Cannabis Control Board Member Jennifer Gilbert-Jenkins called product inversion the state’s “dirty secret” during a December 2024 board meeting.
“How are we validating that the products in stores are actually coming from New York State?” she questioned. “Because the rate of inversion in this market is the dirty secret that everybody is talking about … that the amount of product that’s coming into our legal, authorized dispensaries from out of state is displacing New York product.”
In February 2025, the OCM launched a Trade Practices Bureau dedicated to safeguarding the integrity of the state’s cannabis program through investigating violations, abuse and noncompliance to hold “bad actors” accountable.
In seeking revocation, debarment and monetary penalties against Omnium in this week’s announcement, the OCM also ordered a statewide retail recall of Omnium-linked products. In Monday’s release, the OCM included a photo of a product’s packaging labeled “Omnium d/b/a MFused.” OCM investigators concluded that MFused rented Omnium’s premises and license.
In covering the OCM’s investigation, The New York Times reported that not only is Mfused connected to Omnium, but so too are popular brands Stiiizy and Grön. The article states that Grön continues to rent space in Omnium facilities and draws attention to another article that details Grön’s business partnerships with licensees in other states.
Grön, which has a Type 2 processing license in New York, called the NYT’s article “inaccurate” in a company statement provided to Cannabis Business Times:
“We are disheartened and disappointed with the inaccurate reporting done by the New York Times today in an article that misrepresents our relationships, business practices and general code of conduct in New York. The article, about challenges facing a former partner of ours in New York State, suggests that Grön – a company with an unparalleled reputation in the cannabis industry for transparency and compliance, which are core values of our business – participated in improper licensing and manufacturing in New York State. These claims are entirely false, and we implore the New York Times to review this matter and issue a correction at once.”
An edibles brand from Oregon, Grön contests that it operates in a building completely independent of Omnium under full compliance with the OCM.
“Our relationship with Omnium was short, and during that time, Grön operated in total compliance with OCM’s regulations, which expressly permit out-of-state brands to partner with existing New York processing licensees, proving there is zero merit to any story of questionable material being used,” according to the company statement.
In February, the OCM’s newly launched Trade Practices Bureau (TPB) examined Omnium’s audit and inspection records, reviewed contracts between the company and other businesses, and interviewed several witnesses, according to the OCM.
In Monday’s notice of pleading, the OCM also accused Omnium of material misrepresentation and failing to disclose substantial changes to its business operations.
“Reverse licensing has no place in New York’s market,” TPB Director James Rogers said. “This kind of cheating robs compliant businesses of their right to compete in a fair market. Acting Executive Director Reid set up the bureau to address these kinds of threats to market integrity. The TPB team is grateful to all the individuals who came forward with crucial information and encourage others to do the same. If we work together, we can keep New York’s cannabis market above board.”
