New York Judge Blocks Retail Licenses For Some Cannabis Dispensaries In The State, Here's Why

Judge Gary L. Sharpe of the New York Federal District Court in Syracuse issued an order barring New York's retail cannabis dispensary application process in some state regions, which will affect dispensaries in Brooklyn, central New York, the Finger Lakes, Mid-Hudson and western New York. These regions will need to wait to obtain their Adult Conditional Use Retail Dispensary ("CAURD") licenses until a lawsuit filed by a Michigan-based company is resolved.

What Happened?

According to the federal judge, New York state will have to wait for the resolution of a lawsuit filed by a Michigan-based company challenging the program’s selection requirements before issuing the first batch of retail licenses for recreational cannabis in the regions mentioned above.

The Case

Brought by Variscite NY One, the case argues that requirements for applicants with a cannabis-related conviction under New York state law and significant ties to the state violate constitutional protections of interstate commerce.

However, Judge Sharpe said the state, represented by the attorney general’s office, had not made a convincing case for how the legalization law and regulations were narrowly tailored to serve a legitimate purpose.

Moreover, Variscite argued that the state could achieve its goals by other means, such as establishing business incubators and job training programs, reported the New York Times.

Despite Judge Sharpe noting that Variscite “has also demonstrated a clear likelihood of success on the merits,” his decision is now affecting 63 of the 150 licenses that the state planned to issue to businesses and individuals who met narrow criteria.

Background

In March 2021, New York legalized recreational cannabis for adults 21 and older. The initiative prioritizes people with past cannabis convictions enabling them to get the first round of adult-use cannabis retail licenses—ahead of existing medical cannabis businesses.

The policy is part of a concerted effort to assure that early business owners in New York's projected billion-dollar marijuana industry will be members of communities that have been affected by the nation’s decades-long war on drugs.

What’s Next?

This decision would hamper New York's plan to begin adult-use marijuana sales this year. As Harris Bricken reported, it is unclear how New York will move forward with the CAURD license and/or whether it will continue to enforce the "presence" requirement (applicants could use a majority owner’s residence or corporate headquarters to prove it) for unaffected regions or for any other types of licenses New York intends to issue for cannabis sales in the state.

Nevertheless, Freeman Klopott, the chief spokesman for the Office of Cannabis Management declined to comment on the litigation, citing agency policy. Klopott only said that the Cannabis Control Board would move forward with plans to review the first recommended licenses for approval on November 21.

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Photo: Courtesy Of Florian Wehde On Unsplash