New York Marijuana Retail Licensing Pause Extended at Least Two Weeks

August 12, 2023 · Green Market Report

The temporary restraining order that halted further cannabis retail licensing in New York was extended by at least two weeks by a state judge on Friday, in a case that has hundreds of conditional permitholders wondering what will come next for them.

The ruling that paused licensing was initially handed down on Monday, after four service-disabled military veterans filed suit against the state Office of Cannabis Management and the Cannabis Control Board, alleging that regulators had wrongly skipped their demographic during the conditional adult use retail dispensary permitting process, which has been ongoing for months.

Judge Kevin Bryant, of the Albany Supreme Court of New York, ruled Friday that the temporary restraining order and preliminary injunction he granted against cannabis regulators would remain in place for another two weeks. He gave both the plaintiffs and the attorney general’s office until Tuesday to file additional briefs in the matter.

“I want everyone back here two weeks from today, and we’ll chart a course moving forward,” Bryant told the parties during the two-hour hearing.

That leaves the state of New York with only 24 operational legal marijuana shops, another 439 retailers with conditional licenses but unable to legally open for business, and a thriving illicit market with an estimated 1,500 unlicensed retailers in New York City alone.

The plaintiffs’ attorneys could not be reached immediately for comment Friday, but the hearing outcome was a major disappointment to scores of CAURD licensees that made the trip north to the Ulster County courthouse.

“We didn’t expect really the (restraining order) to hold,” said Jeremy Rivera, a CAURD licenseholder who was hoping to open his shop in Queens next week, adding he was “not happy with the outcome.”

“The two weeks is a big push. I was slated to open on Tuesday. So now that obviously gets pushed back,” Rivera said. “Now it’s back to the drawing board. I have to reassess my employment situation.”

Rivera said he’s not sure if he’ll be able to hold onto his 23 employees who were expecting to begin work on Monday at his shop, Terp Bros Dispensary in Astoria, New York.

Business as Usual?

Lauren Rudick, a New York City attorney who represents several CAURD licensees, said the situation is “just awful.”

“It’s an immediate chill on all actions and approvals” from regulators, Rudick said, which she predicted will have “ripple effects for the entire supply chain” – though not for the 24 operational dispensaries.

But, Rudick said, stakeholders have no choice but to press on and make the best of the situation, with the assumption that the judge will eventually side with regulators. The alternative – that a new ruling forces the agency to throw out all rules and permits and then start from scratch – is too heady to consider.

“I would advise all my clients, business as usual,” Rudick said. “It’s pivot or die. We lick our wounds and we move on. … This is also par for the course in cannabis.”

It’s also impossible to discern what the outcome may be in two weeks when the case comes back to court, Rudick said.

“I could imagine them splitting the baby and telling OCM ‘No more new licenses, you can continue processing existing licenses,’ but if they do find that OCM acted outside of its rulemaking authority in creating the CAURD program, then we’ve got a big problem for the CAURDs that’s hard to think about,” Rudick said.

An attorney for the state told Judge Bryant during the hearing that the OCM and CCB estimate issuing 500-550 CAURD licenses.

Permitholders Protest

At rally prior to the Friday court hearing, a crowd of CAURD permitholders gathered to protest the lawsuit and the injunction.

“This would snuff the life out of our businesses, and also negatively impact our suppliers, who are licensed farmers, processors, and cultivators,” said Osbert Orduna, one of the CAURD licensees.

Orduna blasted the lawsuit as a front for “special interest groups” and “corporate cannabis,” alluding to the fact that the Coalition for Access to Regulated and Safe Cannabis requested this week to be heard in the case as well. An attorney for the coalition was at the hearing Friday and offered several arguments in favor of the plaintiffs.

The CARSC counts among its members some of the New York medical marijuana companies, including behemoths Acreage Holdings, Curaleaf Holdings, Green Thumb Industries, and PharmaCann. The CARSC is also separately suing the state also over their exclusion from retail permitting.

The OCM noted in a court filing this week that if Bryant were to rule in favor of the plaintiffs, it would mean a delay of at least two and a half months in promulgating final industry rules, because the agency would have to throw out several months’ worth of public comment it’s already taken in.

That would mean the full recreational market launch would be pushed back “well into the winter of 2024,” the OCM asserted in a court deposition.

The OCM revealed in court documents that it had intended to launch the universal recreational marijuana business applications on Oct. 4, but the court ruling could disrupt those plans. At that point, the state’s attorney argued during the Friday court hearing, the four plaintiffs in the suit would be eligible to apply for licensure. (Full Story)

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