Injunction halts New York marijuana equity licensing approvals, processing

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The New York State Supreme Court granted a temporary injunction that prevents the Office of Cannabis Management (OCM) from issuing and approving retail marijuana licenses to social equity applicants.

The temporary injunction, issued Monday, will be in place at least until Friday, when oral arguments will be heard seeking a longer-term injunction.

A longer-term injunction could prevent hundreds of conditional adult-use retail dispensary (CAURD) operators from opening for months.

“If the long-term injunction is granted at Friday’s hearing it could be in place until at least mid-September or early October,” Fatima Afia, a marijuana attorney at New York City-based Rudick Law Group, told MJBizDaily via email.

“So most CAURD applicants and non-operational CAURD licensees could lose some of the first-movers advantage they otherwise would have had if the license application window for the broader adult-use program opens in October as previously announced by OCM.”

On Aug. 4, a group of disabled military veterans in New York filed a lawsuit claiming the state’s system of awarding and issuing licenses to certain social equity applicants violated the state constitution.

The lawsuit, Carmine Fiore et al v. New York State Cannabis Control Board, alleges the OCM overstepped its authority under New York’s 2021 legalization law – the Marihuana Regulation and Taxation Act (MRTA) – and opened the licensing application window first to those with marijuana offenses and their immediate family rather than allowing all applicants to apply at the same time.

The lawsuit further argues that disabled veterans could qualify as social and economic applicants under MRTA and receive certain licensing priorities and benefits.

The legal arguments are similar to a lawsuit filed in March by marijuana multistate operators aiming to gain entry in the state’s developing adult-use cannabis retail market.

The primary difference is the plaintiffs, service-disabled veterans, might find it easier to demonstrate they’ve been “irreparably harmed” by the CAURD program, a requirement to securing the injunction, according to Afia.

The temporary injunction granted Monday affects more than 400 CAURD licensees throughout the state after the approval of 200-plus social equity retail licenses a few weeks ago.

“In these challenging times, we recognize the importance of a thriving legal market, not only for economic growth but also for the well-being of our community,” the New York CAURD Coalition trade association said in a statement to MJBizDaily.

“We must work together to ensure that the progress made thus far is not hindered by prolonged lockdowns or unnecessary delays.”

The trade group counts more than 150 members and a majority of the state’s retail licensees who qualified for CAURD having previous low-level marijuana offenses or family members charged with similar offenses and operated a profitable business for two years.

If an injunction is granted Friday, CAURD applicants and licensees will get an opportunity to weigh in, according to Afia.

“It will be interesting to see if any CAURD applicants and licensees intervene in this lawsuit to demonstrate their own harm if the injunction is granted,” Afia said.

“Namely, the loss of first-movers advantage that they presumably relied upon in applying for the license; the exorbitant costs of putting together their teams and application materials; loss of funding they may have been promised or received; their inability to honor material contracts they’ve already executed; and the list continues.”

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.