2025 was the warning shot.
2026 is the bloodbath.
The Office of Cannabis Management (OCM) and the Dormitory Authority (DASNY) are now actively investigating funding sources on every single CAURD and AUCC licensee. They’ve already issued cease-and-desist letters, frozen bank accounts, and revoked three provisional licenses in Q3–Q4 2025 alone — all over illegal securities offerings.
If you’re still raising money the way people did in 2023–2024, you’re begging to be next.
Here are the 7 biggest capital-raising mistakes NY social equity licensees are making right now — and exactly how to avoid becoming the next cautionary tale.
Mistake #1: Selling “Percentage of Profits” to Friends & Family
Telling Aunt Karen she’ll get “5% of the store profits forever” = selling an unregistered security.
Penalty: Immediate license revocation + SEC fines.
Fix: Use revenue-sharing loans or convertible notes drafted by a cannabis securities attorney. Never promise equity or profits without proper filings.
Mistake #2: Posting “Investor Wanted – 20% Equity for $200K” on Instagram/LinkedIn
Yes, people are still doing this in 2026. The OCM has a team scraping social media weekly.
Fix: All investor outreach must be private, password-protected data rooms only. Public solicitations = general solicitation = illegal unless you file Reg D 506(c) and verify accredited status.
Mistake #3: Taking Money from Non-Accredited Investors Without Reg CF or Reg A
Most CAURD operators aren’t rich. Their investors usually aren’t either. Taking $50K from your barber who makes $70K/year? That’s an illegal securities sale unless you crowdfund properly.
Fix: Use Wefunder, Republic, or MainVest with proper Reg CF (up to $5M from anyone) or bite the bullet and do a full Reg A (up to $75M).
Mistake #4: Letting Investors “Help Run the Business”
If your investor is picking strains, hiring staff, or negotiating vendor contracts, the OCM now considers them a “true party of interest” (TPI) who needs full background checks and disclosure. Hide them and you lose the license.
Fix: Keep all investors passive or formally disclose them on your TPI forms before taking a single dollar.
Mistake #5: Using “Consulting Agreements” to Pay Back Investors
Paying someone $15K/month for “brand consulting” when they actually invested $300K? That’s securities fraud wearing a cheap disguise.
The OCM caught six groups doing this in 2025. All six lost their licenses.
Fix: Structure it as debt or use proper SAFEs/convertible notes. Fake consulting deals are dead.
Mistake #6: Raising from Out-of-State Investors Without NY-Specific Disclosures
New York now requires specific language warning investors that CAURD/AUCC licenses are non-transferable and tied to social equity status. Skip it and your entire raise can be deemed fraudulent.
Fix: Every single investor deck and agreement needs the OCM-mandated risk disclosures verbatim.
Mistake #7: Not Having a Cannabis-Focused PPM & Subscription Agreement
“We’ll just use the template from LegalZoom” is the fastest way to get your license suspended in 2026.
Fix: Hire a NY cannabis securities attorney. A proper Private Placement Memorandum (PPM) costs $15K–$25K but saves your license and actually helps you raise 3x faster from real investors.
The Bottom Line
The OCM isn’t playing nice anymore. They want the bad actors gone so the real justice-involved and legacy operators can thrive.
Raise money the right way and you’ll get funded faster, sleep at night, and keep your license.
Raise it wrong and you’ll be the next name on the revocation list.
Don’t let sloppy fundraising be the reason you lose the license you fought years for.
Get it right. Get funded. Stay open.
✍️ By Daniel Sabet, Cannabis CFO & Financial Advisor at @GreenGrowthCPAs. Daniel advises cannabis operators nationwide on finance, compliance, and strategy.
GreenGrowth CPAs: 1178 Broadway, 3rd Floor, New York, NY 10001
