New lawsuit filed against New York Cannabis Agency

The New York-based Coalition for Access to Regulated & Safe Cannabis (CARSC) recently filed a lawsuit against the Office of Cannabis Management (OCM) on March 16. CARSC is an “unincorporated trade association” that includes a handful of organizations including Acreage Holdings, PharmaCann, Green Thumb Industries and Curaleaf, all of which have attempted to apply for a pharmacy license in New York.

The lawsuit asks a judge to declare the conditional retail pharmacy for adult use (CAURD) unconstitutional and find that the OCM and the Cannabis Control Board (CCB) have exceeded their powers.

The lawsuit was filed by Feuerstein Kulick in Albany County Superior Court, alleging that the Marijuana Ordinance and Tax Act of 2021 required both the OCM and CCB to “the initial adult retail pharmacy license application deadline … for all applicants at the same time.” Both agencies created the CAURD, which created a new license class and allowed specific groups to apply for it, rather than “all applicants”.

“Instead of fulfilling the duties required by the MRTA – which would promote a safe and regulated cannabis industry for medical patients and consumers alike – the CCB and OCM have mistakenly assumed the role of legislature to impose their own policies on those of New York’s elected officials, and by extension, too.” their constituents,” the lawsuit reads, according to Syracuse.com.

The lawsuit alleges that the CCB and OCM failed to comply with the requirements of the MRTA and instead abused their powers to create the CAURD. CAURD grew out of New York Gov. Kathy Hochul’s Seeding Opportunity Initiative, which was announced in March 2022 and “positions individuals with prior cannabis-related offenses” to acquire one of 150 licenses and an additional 25 for nonprofit organizations. It requires that an applicant must have been convicted of a cannabis crime in upstate New York and also have a “significant presence.”

The lawsuit alleges that a 20-month delay in proposed cannabis regulations is a violation of state law, among other evidence, including growers growing thousands of pounds of cannabis without retail outlets set up to sell it all.

In July 2022, OCM Executive Director Chris Alexander spoke to NY Cannabis Insider about the dangers of a lawsuit like this. “I’m not concerned about the retail opportunity challenge as the board has the authority to create additional licenses,” Alexander said. “We are considering legal challenges that might come with the program, but as such we are staying as close as possible to the law and the powers the law has given us.”

A month before the October 2022 CAURD application window expired, another lawsuit was filed, preventing the OCM from issuing licenses in five of 14 territories: Finger Lakes, Central New York, Western New York, Mid-Hudson, and Brooklyn. The lawsuit alleges that CAURD violates the Dormant Commerce Clause, which “refers to the implicit in the Commerce Clause prohibiting states from adopting laws that discriminate against or unduly burden commerce between states.”

Another lawsuit filed by Variscite NY One, a Michigan-based company, was denied a license because it is 51% owned by an individual who has no “substantial presence” in New York and has a cannabis conviction in Michigan and not in New York.

Syracuse.com states that 66 CAURD licenses have been issued to date, with the CCB announcing in March that it plans to increase the license pool to 300.

Sen. Jeremy Cooney, who co-sponsored the MRTA, addressed the lawsuit’s concerns in a statement to NY Cannabis Insider. “When we passed the MRTA, there was a consensus that introducing adult recreational cannabis and expanding the medical cannabis program in New York would be complex and met with obstacles,” said Cooney. “While a potential lawsuit will undoubtedly present a new challenge, we must not allow it to become an obstacle to progress. We must continue our efforts to deliver for operators, patients and consumers as the legal process unfolds. We are committed to improving patient access to the medical program and creating equal opportunities in the leisure market.”