New York judge suspends licensing of cannabis dispensaries

A New York judge on Monday issued an injunction barring state cannabis regulators from issuing licenses to retail marijuana dispensaries in response to a lawsuit challenging the rules for obtaining the lucrative permits. A group of military veterans filed the lawsuit last week, arguing that state regulations restricting initial CAURD (conditional use retail dispensary) licenses to those with prior marijuana convictions violate state law and the New York Constitution.

The lawsuit was filed by four veterans who collectively served in different branches of the US military for more than two decades. The vets argue that restricting retail licenses to those with a cannabis criminal record violates the state constitution and was not approved by the legislature when it legalized adult-use cannabis two years ago.

The Marijuana Regulation and Taxation Act, the 2021 law that legalized recreational marijuana in New York, includes provisions that set the goal of awarding at least half of the state’s recreational marijuana dispensaries to social and economic justice claimants. Under a program created by New York Gov. Kathy Hochul last year, the state’s first CAURD licenses for retail cannabis businesses are “reserved for individuals most affected by unfair enforcement of cannabis prohibition, or non-profit organizations, to whose services include assisting ex-prisoners”. .”

To qualify for a CAURD license, applicants must, among other things, either have a cannabis conviction or be a family member of a person convicted of cannabis. Non-profit organizations that have previously or currently served inmates were also eligible to apply for a CAURD license. To date, the Office of Cannabis Management (OCM), the state’s cannabis regulatory agency, has issued 463 CAURD licenses, although fewer than two dozen dispensaries have opened nationwide.

Matt Morey, an attorney and legal analyst, says the MRTA has established disabled veterans as a subclass of social and economic justice applicants who could be given priority in cannabis licensing. So far, however, the OCM has only approved applications from people involved in the justice system.

“The bylaws specifically listed those individuals as having priority in applying for and obtaining approval for an adult retail license,” Morey told Spectrum News.

The veterans who filed the lawsuit last week argue that the state’s implementation of the CAURD program unfairly and unreasonably excludes other potential social and economic justice claimants, including disabled veterans and members of minority groups.

“Individuals such as disabled veterans who are also social justice claimants who should be given priority under the MRTA — the Marijuana Regulation and Taxation Act — plaintiffs argue that they were harmed by being denied the benefit of that first.” Movers was withdrawn. said Fatima Afia, an attorney at Rudick Law Group.

William Norgard, a US Army veteran and one of the plaintiffs in the case, said the introduction of MRTA in New York put him and other veterans in an unusual position to challenge the government.

“It’s unlike a veteran to sue the state to comply with a law,” Norgard said in a statement when the lawsuit was filed. “We take oaths to defend our nation’s laws and trust, perhaps naively, that government officials will faithfully and lawfully enforce those laws. What the Office of Cannabis Management is currently doing totally violates that trust. As veterans, we know someone has to hold the line.”

Order prevents OCM from issuing new licenses

The judge’s injunction prohibits OCM from issuing or processing additional licenses for marijuana retailers until the court rules otherwise. When asked for comment after the lawsuit was filed, an OCM spokesman said the agency would not comment on pending litigation. The agency later said it had received the restraining order and would comply with the judge’s decision.

“The Office of Cannabis Management (OCM) is aware of the court order and is complying with its requirements,” the agency wrote in a statement Tuesday. “We are actively communicating with CAURD applicants and provisional licensees to update them on the impact of the court decision on OCM operations.”

State Senator Jeremy Cooney, chairman of the New York State Senate Subcommittee on Cannabis, released a statement Monday night in response to the judge’s injunction.

“I am deeply disappointed by today’s court decision temporarily halting the issuance of conditional retail cannabis licenses in New York State,” said Cooney. “It’s no secret that the adoption of adult-use cannabis in New York is slower than expected, and now is not the time to stand in the way of the progress that is being made. We need to focus on granting unconditional licenses, prioritizing social justice candidates and allowing more businesses to open.”

The judge’s injunction will result in a further delay in launching the regulated marijuana industry in New York, which already faces significant challenges and an entrenched illicit cannabis market.

“It’s going to drag things out even more,” Morey said. “The rollout of these programs was by no means smooth.”

Morey said the pharmacy licenses already granted are not immediately at risk from the judge’s decision. However, should the license terms be invalidated, the fate of current licensees could be uncertain.

“If the creation of the entire CAURD program is held to be unconstitutional, that would raise the question of whether or not previously issued licenses are actually invalid under the program at this point, and that remains to be seen,” he said.