63 New York pharmacy licenses are suspended in federal court

Pharmacies in Brooklyn and other regions will not be licensed until a federal court resolves a Michigan man’s claim that the licensing process discriminates against out-of-state operators, blocks interstate commerce and is unconstitutional. The legal delay could jeopardize the entire market for adult use.

A new federal lawsuit will delay the issuance of pharmacy licenses in Brooklyn, Finger Lakes, Central NY, Western NY and Mid-Hudson. This signals that at least 63 of the 150 planned new dispensaries will be held back under geographic boundaries set by the state earlier this year.

An LLC named Variscite NY One filed the injunction, alleging that the Office of Cannabis Management’s dispensary licensing process discriminates against out-of-state operators and blocks interstate commerce.

Last month, the OCM released guidelines advising CAURD license applicants on how to prepare for the rapidly approaching opening day. The guidelines are intended as temporary guidance and not as official regulations that will define the market for adult use.

Read the full court documents here and see what the OCM, plaintiff and judge had to say below.

Why Are Some NY Pharmacy Licenses Delayed?

The plaintiff, Variscite, meets many of the criteria for a conditional adult recreational dispensary (CAURD) applicant, including a nonviolent conviction of cannabis. The problem is that the sentencing took place in Michigan, not New York. Therefore, the majority owner, a Michigan resident Kenneth Gay, is ultimately barred from the first round of CAURD licenses.

A court filing obtained by Leafly states: “Variscite applied for a CAURD license; however, because it is [fifty-one percent] owned by a person with a criminal record under Michigan law for cannabis and “has no significant connection to New York,” 3 Variscite is not eligible for selection. (Compl. T31.) ‘Variscit meets all [other] Requirements of the Cannabis Act and Cannabis Regulations applicable in the CAURD application program.’ (Id. T1 31.)

Why does this case only delay some licenses?

As part of its application, Variscite selected the Finger Lakes, Central New York, Western New York, Mid-Hudson and Brooklyn as the regions where the application would be considered.

The injunction means that the OCM cannot issue licenses in these areas until the case is resolved.

Variscite alleges the state violated an old interstate trade clause that prevents states from discriminating against residents from out of state in favor of local residents. The lawsuit lists OCM’s executive officer, Chris Alexander, as a defendant, along with OCM and the state of New York.

Variscite’s attorneys argued that the state’s goals of social justice could be cultivated through non-discriminatory means such as incubators or job training programs. They added that a widespread foreclosure of operators will irreparably damage Variscite’s existing business as the company will have to wait for the next application window to catch up with the first wave of CAURD recipients. In October, a judge denied Variscite’s motion to halt the retail licensing process, but things appear to have changed.

Hon. Judge Gary Sharpe ruled in favor of Variscite and issued an injunction that will halt licensing in some areas of New York and potentially subject the entire CAURD process to scrutiny and setbacks.

How will this affect Rec Day 1 in New York next month?

Its not clear yet. But a large chunk of the pharmacies that we expected to be open by the end of December probably won’t make it in time for the New Year’s Eve party.

The lack of licensed pharmacies will go unnoticed by many New Yorkers, who will simply continue to shop in the state’s robust gray market. Gray market sellers are operating in the legal gap between the March 2021 legalization law and the upcoming launch of licensed retailers by the OCM, which has long been promised by the end of 2022.

Earlier, the OCM and NYC Mayor Adams told gray market retailers they would not be arrested and, for the time being, might not even be fined for selling cannabis without a license. However, they warned that if caught, rogue sellers would ultimately be prevented from ever obtaining their own licenses. And this stricter enforcement will come after licensed pharmacies open.

The entire CAURD program is now vulnerable to similar legal action in other regions, as a federal judge has legitimized Variscite’s claims of interstate discrimination by citing the Dormant Trade Clause, which prohibits states from enacting laws affecting state-owned companies favor over foreigners. state-owned companies.

No pharmacies in Brooklyn for now

For now, the lawsuit could perpetuate the status quo of gift shops, weed trucks, and the booming gray market. But the state could also find a way to calm down quickly and prevent further delays.

So keep calm New York and in the meantime keep supporting your local weed suppliers. Alternatively, you can apply for a health card if you want regulated products. Just don’t count on New York having enough licensed retailers to feed the state’s massive appetite for cannabis on the first day of its new legal market in December.