Flurry of Legal Filings in New York Licensing Lawsuit

Fourteen parties having requested be added to the case.

The past few days have seen almost 80 documents filed with the New York state court that’s put a temporary hold on cannabis retail licensing, with 14 parties having requested be added to the case and lots of finger-pointing.

But for now, there’ll be no further movement on retail licensing until at least Aug. 25, when the next hearing is scheduled, which could decide the fate of New York’s conditional adult use retail dispensary (CAURD) licensing program.

One group connected to the litigation, the Coalition for Access to Regulated and Safe Cannabis, claimed that representatives for the state of New York walked away from settlement negotiations, choosing instead to put their arguments before Albany Supreme Court Judge Kevin Bryant.

“The State’s decision to withdraw from settlement negotiations that could have resolved legal challenges” is “an affront to Black and brown New Yorkers and to the victims of the Drug War on whose behalf that (Office of Cannabis Management) purports to speak,” Rev. Kirsten John Foy, spokesman for the Coalition for Access to Safe and Regulated Cannabis (CARSC) said in a statement. The coalition includes several of the large cannabis companies that hold medical marijuana permits in New York, including Acreage Holdings, PharmaCann, Curaleaf and Green Thumb Industries.

A spokesperson for the OCM replied in an email that the agency does not comment on specific pending litigation. However, Trivette Knowles, public affairs press officer and manager of community outreach, pointed out that despite the restraining order, consumers still have options.

“New Yorkers can still purchase legal, safe-and-tested cannabis from existing operational dispensaries (including via delivery) or by attending Cannabis Growers Showcase events throughout the state,” he said via email. “All licensees partnering together to host a CGS event are compliant and prepared to provide consumers with legal, New York-grown cannabis.”

Another source familiar with the proceedings on Friday in Ulster County Courthouse, where Judge Bryant issued the temporary restraining order, said there was a two-and-a-half-hour long meeting in Bryant’s chambers after the hearing concluded, with lawyers from all stakeholders at the time present. And representatives for the state chose to walk away rather than settle the situation, according to a court filing from CARSC attorney David Feuerstein on Tuesday.

That’s despite Bryant’s plea at the close of the hearing on Friday that all parties work together to find a solution outside of litigation, the CARSC noted.

“We are disappointed – to say the least – that the State and Intervenors so abruptly and unilaterally decided to terminate these discussions and to risk the issuance of an injunction,” Feuerstein wrote in the filing, calling the move “symptomatic of the State’s defiant posture—a posture that has precipitated the current impasse.”

“The best solution for all New Yorkers is to honor the MRTA as written and to open the adult use application for all retail dispensaries immediately,” Feuerstein wrote, noting that his organization has “no position” on the restraining order that’s preventing the processing of further licenses.

When asked for comment on the reported negotiations, a spokesperson for the four service-disabled veterans who are the plaintiffs in the case emailed a statement to Green Market Report that said the quartet is “fighting for equal access to this new and growing industry.”

“OCM has resoundingly failed to create the legal cannabis market envisioned” in state law, the veterans wrote. “Every day that the adult-use program is limited to only the CAURD program is another day the other MRTA-designated minority groups and New York State farmers are left out in the cold.”

Assistant Attorney General Shannan Collier Krasnokutski shot back in a court filing Tuesday that the veterans’ alleged injury by not receiving CAURD licenses “is both monetary and speculative.  Neither is sufficient to show irreparable harm.”

“Balancing all the potential harm that could accrue to these four Plaintiffs against the havoc the continuing injunction is creating in the nascent cannabis industry, Defendants respectfully submit that the balance in this case is not even close,” Krasnokutski wrote. “The harm to Defendants and the public from the ongoing injunction dramatically outweighs any harm Plaintiffs could possibly suffer from being required to apply during the regular adult-use application period.”

The More the Merrier

In addition to the CARSC, the state’s Social Equity Cannabis Investment Fund’s leadership, as well as 13 CAURD licensees, received permission to join the legal action as affected parties, according to court records. They all oppose the temporary restraining order halting the existing system, but they have different positions on what the court and state should do next.

One of the attorneys with clients who want to be heard in the case suggested it’s a move that could tip the balance in favor of the state and get the restraining order lifted.

“There’s a little bit of a mindset of strength in numbers,” said attorney Duncan Delano, who represents three CAURD licensees, including one who was planning to open this week but is now in limbo. “When you balance the equities properly, it’s clear that a (restraining order) injures the CAURD holders … a lot more than disabled veterans in general who have to wait until October.”

Delano pointed to the fact that the OCM has said, both at the hearing on Friday and in court filings, that it intends to open up universal marijuana business license applications on Oct. 4, which means the four plaintiffs could simply wait until then and apply instead of suing. That, he argued, should be enough to persuade Bryant to lift the restraining order.

But Delano admitted it’s still unclear what will happen.

“There’s a lot of confusion about what’s going on behind the scenes,” Delano said when asked about the reported settlement talks breaking down on Friday. “A settlement is still more than likely, but I’m less certain now than last week.”

Wei Hu, another cannabis attorney who got permission for six of his CAURD clients to join the legal action, confidently predicted that Bryant would lift the restraining order because he believes the plaintiffs are incapable of proving that the OCM acted arbitrarily and capriciously in creating the CAURD program, while the actual CAURD licensees are suffering quantifiable financial harm.

“People are already paying leases on buildings they can’t open,” Hu said. “For this to happen, it’s devastating.”

John Schroyer

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