While the state has slowly opened a number of recreational cannabis dispensaries over the last several months amongst a lengthy crawl to jumpstart the retail market, New York once again finds itself in a cannabis-related bind.
The Coalition for Access to Regulated and Safe Cannabis (CARSC), including some of New York’s medical cannabis companies, dispensary hopefuls and a medical cannabis physician, sued state cannabis regulators on Thursday, hoping to open up licensing to all retail dispensary applicants immediately, Associated Press reports. It’s the second lawsuit to challenge the state’s rollout of legal cannabis sales.
The lawsuit accuses the state’s Office of Cannabis Management (OCM) and Cannabis Control Board (CCB) of unconstitutional overreach when regulators opened the initial application portal in August exclusively to people with past cannabis convictions and their relatives. Applicants also had to have a significant presence in New York State and prove that they have successfully run a business.
The lawsuit requests that regulators immediately open up the application process for recreational cannabis dispensaries to all parties.
A memo filed with the lawsuit alleges that regulatory cannabis boards “overstepped their rule-making authority” and because of this, they “indefinitely postponed the licensing of the hundreds of additional dispensaries necessary to satisfy consumer demand and to displace the illicit markets.”
Coalition members said that they planned to seek out licenses when the window first opened in New York State. It includes large, out-of-state cannabis chains like Acreage Holdings, PharmaCann, Green Thumb Industries and Curaleaf, along with California and Brooklyn-based applicants and a Westchester medical cannabis practitioner.
“Rather than perform the tasks required by the MRTA – which would promote a safe and regulated cannabis industry for medical patients and adult-use consumers alike – CCB and OCM have improperly assumed the role of the Legislature to impose their own policies over those of New York’s elected officials and, by extension, their constituents,” the lawsuit alleges.
The lawsuit comes nearly two years after New York legalized recreational cannabis for adult use. The state has awarded 66 dispensary licenses so far, and the state’s fifth store, a dispensary in Ithaca, was set to open on Thursday.
The first legal challenge of the state’s cannabis licensing process occurred in November 2022, when a judge temporarily blocked New York from issuing cannabis dispensary licenses in a number of New York regions after Michigan company, Variscite NY One, said it was improperly kept out of the license lottery as an out-of-state company. Because it listed Western New York, Finger Lakes, Central New York, Mid Hudson Valley and Brooklyn as its preferred places to do business, sales have been on hold in those regions while the courts decide the ongoing case.
That suit has delayed the issuance of at least 63 permits in the five regions.
The recent lawsuit also claims that, if licensing had been open to all applicants, the state wouldn’t be dealing with the many illicit retail operations it is currently combating. It also suggested that an open licensing process would have generated enough tax revenue to reinvest in local communities.
In January, the New York Post reported that 1,400 shops had opened around New York City illegally selling cannabis products.
In February, Curaleaf Executive Chairman Boris Jordan criticized the rollout of the New York adult-use market and its approach to delaying multistate operators in favor of social equity applicants, saying that New York took social justice efforts “too far.”
Cannabis industry stakeholders have also raised red flags over the state’s ability to finance social equity cannabis shops. Gov. Kathy Hochul (D) announced a $200 million fund nearly a year ago, though it reportedly raised just $50 million for the fund. According to MJBizDaily, the remaining $150 million is to come from private-sector investors, but despite a Sept. 1, 2022 deadline to secure these funds, the state still has yet to do so.