Lawsuit claims race, gender bias by New York’s marijuana regulator

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New York’s Office of Cannabis Management (OCM) and its supervisory Cannabis Control Board are being sued by a microbusiness license applicant claiming discrimination against a business owned by white men as a result of the marijuana regulator’s equity push.

The lawsuit, filed last week in the U.S. District Court for the Northern District of New York, also names OCM Executive Director Chris Alexander and Chief Equity Officer Damian Fagon.

The complaint, which claims violation of the U.S. Constitution’s equal protection clause, seeks relief to prevent the alleged discrimination.

The suit takes issue with the OCM’s efforts to promote diversity in the New York cannabis industry by favoring businesses owned by certain groups, such as Black people or women.

Jamesville, New York-based plaintiff Valencia AG is owned by white men.

Valencia said it filed its microbusiness cannabis license application in October 2023, but the application has not been reviewed.

The company said it is running up costs for its facility lease, utilities and insurance but can’t use the space and “has suffered damages and harm due to delays in obtaining a cannabis license.”

Roughly 1,800 equity applicants are ranked higher than Valencia in the regulator’s application queue, according to the court document.

Valencia claimed equity applicants “will enjoy a ‘head start’ in being granted a license, with its attendant quick earnings of revenues and profits, its encountering less competition, and its early establishment of customer loyalty.”

On the other hand, Valencia said it “will almost certainly not be granted a license in the foreseeable future.”

The complaint also claims that the individual OCM defendants – none of whom are white men – “have been in charge of implementing (social and economic equity) procedures that favor and give preference to their own race and gender.”

“The situation is akin to having such key positions held by only white men, and allowing those white men to create and implement regulations and procedures that favor white men,” the court document continues.

The lawsuit is only the latest challenge to New York’s troubled adult-use marijuana rollout, including roadblocks to the state’s government’s social equity goals.

A temporary injunction was granted against the OCM’s social equity licensing process last August, although that injunction is no longer in effect after a settlement.

Another recent lawsuit against the OCM targets residency requirements in the licensing process.