Online marijuana dispensary finder and lifestyle website Leafly (Nasdaq: LFLY) won a temporary legal victory over New York cannabis advertising restrictions, when a state judge issued an order blocking the enforcement of the prohibitions.
The lawsuit, filed earlier this week by Seattle-based Leafly, New York’s Stage One Dispensary, and a consumer, “alleges that New York’s Office of Cannabis Management (OCM) unfairly targeted so-called ‘third-party platforms’ in a misguided attempt to restrict the manner in which retailers may market or promote their business and products, and prevent price-shopping consumer behaviors,” according to a press release.
After the New York attorney general’s office agreed to a stay on the enforcement of the provisions in question, the judge overseeing the case issued an order preventing the OCM from enforcing it.
The order only explicitly exempts Leafly from the enforcement of the rules, apparently giving the website a temporary online cannabis advertising monopoly in the Empire State.
“We are very pleased with the order, but remain concerned that the (OCM’s) stance towards third-party platforms deprives consumers and licensed cannabis retailers with important tools that help them navigate legal cannabis in New York state,” Yoko Miyashita, CEO of Leafly, said in a statement. “We’ll continue to work toward sensible regulations and are hopeful for a solution that empowers small businesses and supports consumer education and choice, while still protecting the public health, safety, and welfare of the people of New York.”
Galina Innes, CFO of Stage One Dispensary, added that “the regulations as adopted are needless restrictions on the most basic of market activities and only serve to undermine the emerging legal cannabis market.”
Innes said the order allowing her shop and others is a “step in the right direction” for the New York market because it’s difficult otherwise for legal retails to reach consumers.
The court victory may be a crucial one for Leafly’s bottom line; the company has struggled in recent quarters despite laying off chunks of staff and pivoting away from hard news and more into consumer-focused content. Leafly posted a $1.4 million loss in Q2 and a $5.4 million loss in Q1 so far in 2023.