On Monday October 20, the New York State Office of Cannabis Management (OCM) issued a Notice of Pleading (NOP) against Omnium Health, Inc., a processing and distribution licensee. OCM charges Omnium with facilitating a scheme that allowed unlicensed cannabis businesses to hide under Omnium's license and produce cannabis sold to retailers across the State. The allegations detail actions that violate State law, undermine New York's goals for equity in business development, and harm the businesses who work hard to follow OCM's compliance rules.
"I have heard so many in New York cannabis call for fairness at every level. Omnium's alleged conduct is a blatant breach of the licensing rules designed to ensure transparency and fairness in the legal market," said Felicia A. B. Reid, Executive Deputy Director of the Office of Cannabis Management. "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."
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The investigation
OCM launched its investigation into Omnium in February 2025 following a referral from the agency's Compliance team to the Trade Practices Bureau (TPB). TPB investigators examined audit and inspection records, reviewed contracts between Omnium and the unlicensed businesses, and took testimony from several witnesses.
The NOP alleges that Omnium, under the cover of its status as a New York licensee, let unlicensed businesses use Omnium facilities and resources. Omnium then charged these businesses rent—creating a 'rent-a-license' scheme, also known as 'reverse licensing.' These businesses then produced and packaged cannabis and got that product into dispensaries. This arrangement gave unlicensed operators an unearned backdoor into New York's regulated market, undermining integrity and transparency.
"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."
"Reverse licensing has no place in New York's market," said James Rogers, Trade Practices Bureau Director. "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."
The NOP alleges violations including aiding and abetting unlicensed processing, material misrepresentation, and failure to disclose substantial changes in business operations. OCM is seeking the following penalties: revocation of both processor and distributor licenses; debarment from applying for future licensure; civil penalties related to the projected revenue from the sale or possession of the unauthorized cannabis products; retail recall from the market of all products made by unlicensed processors; and destruction of unlawfully produced cannabis products.
Misrepresentation
Amid the fallout, the New York Times reported that several major brands were involved in the investigation, including Stiiizy, Mfused, and Gron. The article suggested Gron continued to use Omnium facilities while the probe unfolded, prompting a sharp response from the Oregon-based edibles company.
Gron said in a statement that the Times misrepresented its operations and compliance record. The company emphasized that it owns and operates its own Type 2 processing license in New York, in a facility entirely independent from Omnium, with full knowledge and approval from OCM. Gron stressed that it has never operated in any grey area and that all its manufacturing is fully compliant, traceable, and transparent.
"Our relationship with Omnium was short, and during that time, Gron operated in total compliance with OCM regulations, which expressly permit out-of-state brands to partner with licensed New York processors," the statement said. "There is zero merit to any story suggesting questionable material was used. We urge the New York Times to correct their mischaracterization of Gron, which is simply inaccurate and unjust."