Court ruling spells more trouble for New York’s adult-use marijuana industry

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New York’s struggle to create an equitable adult-use marijuana industry has suffered another major blow.

A state Supreme Court judge on Aug. 18 ruled that New York’s discretionary licensing process violates the law.

The ruling by Supreme Court Judge Kevin Bryant upheld a lawsuit filed by a group of would-be marijuana entrepreneurs.

As a result, the state Office of Cannabis Management (OCM) remains prohibited from issuing any new retail licenses until at least Aug. 25.

Further arguments are scheduled for that day.

The OCM will appeal, a spokesperson said in a statement Monday.

Bryant’s ruling does not apply to anyone who had “met all requirements for licensing” before Aug. 7; but that might not help the hundreds of entrepreneurs currently seeking a Conditional Adult Use Retail Dispensary (CAURD) license.

For now, a CAURD permit is the only outlet for licensed, legal adult-use cannabis sales in the state.

The four “service-disabled veterans” whose Aug. 2 lawsuit has stalled New York’s marijuana industry said in a statement that the justice’s decision reflects the “irreparable harms we are facing through (state regulators’) failures to follow the law.”

The Office of Cannabis Management “has resoundingly failed to create the legal cannabis market envisioned by New York’s Marihuana Regulation and Taxation Act (MRTA), in large part by keeping licenses out of the hands of service-disabled veterans and other minority groups the law prioritizes,” the statement also noted.

“Every day that the adult-use program was limited to only the CAURD program was another day the MRTA-designated priority groups and New York State farmers were left out in the cold.”

Hal McCabe, the interim executive director of the Cannabis Association of New York – a trade group consisting mostly of small businesses including growers as well as CAURD licensees – called the ruling “another nail in the coffin of the social equity promise of NY’s cannabis industry rollout.”

CANY and other advocates have asked New York lawmakers to enshrine CAURD licenses and OCM’s general social equity program in state law but to no avail, McCabe added.

In a statement emailed to MJBizDaily, OCM spokesperson Trivette Knowles called the ruling a “disappointment” and said state regulators would be “in touch will all licensees to discuss the path forward.”

In the meantime, Knowles added, the state “will absolutely apply to the Court for exemptions from the injunction on behalf of provisional licensees who are ready to open as we work to provide access to safer, tested cannabis products.”

However, the Aug. 18 ruling was a significant setback for the state.

“There is no dispute” that state law says applications “shall be opened for all applicants at the same time,” Bryant wrote in his ruling.

Further, “despite this language,” state regulators “have not accepted applications for other retail licenses,” the justice added.

It’s also not in dispute, he wrote, that the CAURD licenses do not “appear anywhere in” state marijuana law.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.