New York judge reverses, pauses all marijuana licensing in state

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In a stunning reversal, a New York state Supreme Court judge on Monday held up all business applications to open adult-use marijuana stores in the state after finding cannabis regulators provided him “contradictory and confusing” information.

This latest stumble in New York’s tortured rollout of legal marijuana comes in an ongoing challenge to the Office of Cannabis Management’s Conditional Adult Use Retail Dispensary (CAURD) program.

After legalizing marijuana in March 2021, state lawmakers and cannabis regulators promised the first several hundred retail licenses would be reserved for small nonprofits and “justice-impacted individuals” who could demonstrate drug war-related harm.

That left out many would-be marijuana businesses, including existing medical cannabis licenses held mostly by large multistate operators – a group of which sued the state earlier this year.

Earlier this month, some “service-disabled” military veterans also sued the state, claiming the CAURD program is unconstitutional and – since they did not qualify for a permit – violates their rights.

In response to that suit, state Supreme Court Judge Kevin Bryant issued an injunction on Aug. 7 that put all CAURD applications on hold. The injunction was upheld Aug. 18.

Though several hundred fledgling CAURD businesses have received licenses from the Office of Cannabis Management (OCM), only 23 legal marijuana stores are open across the state, according to the agency’s data.

Meanwhile, more than 1,500 unlicensed cannabis stores are operating in New York City alone.

There was a glimmer of hope for some applicants last week, when the state furnished a list of 30 CAURD applicants who had progressed far enough in the process to be exempt from Bryant’s injunction.

During a brief hearing on Friday, the judge indicated that some of the 30 would be allowed to proceed and open for business.

However, Bryant noted in his ruling Monday that the OCM “appears to admit that not all 30 applicants have met all licensing requirements.”

The “contradictory and confusing” information from the OCM means the agency “failed to comply” with Bryant’s order, the judge added.

Bryant directed the OCM to resubmit a list of applicants that might be exempt to the injunction “under oath.”

When the agency complies, Bryant “will promptly issue an Order that addresses each individual licensee on a case-by-case basis,” he wrote.

The OCM did not immediately respond to a request for comment on Monday.

CAURD applicants and legal observers reacted to this latest development with a mix of outrage and disbelief.

“Today is an unfortunate step backwards in this ongoing litigation, where hundreds of small businesses, thousands of potential employees, and NY’s legal cannabis consumers are being irreparably harmed by a lawsuit brought by four individuals,” said Osbert Orduña, CEO of The Cannabis Place, which has a CAURD application to operate in Queens in progress.

The business has already spent more than $3 million trying to open, Orduña said.

“It’s a sad day in cannabis.”

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