Judge Narrows New York Retail Licensing Injunction to One Region

The state may now start issuing licenses in four additional regions, including Brooklyn.

An injunction issued by a federal judge in November that stalled retail cannabis licensing in five of New York’s regions has been narrowed now to just one – the Finger Lakes.

That means marijuana retail licenses can now be awarded by the state Office of Cannabis Management in the other four regions, which include Brooklyn, Central New York, Western New York, and the Mid-Hudson areas.

The ruling came from a three-judge panel in the U.S. Court of Appeals for the Second Circuit on Tuesday afternoon and amended the injunction issued by U.S. District Court Judge Gary Sharpe last fall.

Variscite order March 28

“The district court’s injunction is modified so that it bars the issuance of conditional adult-use retail dispensary licenses only in the Finger Lakes region,” the order states.

The OCM said previously that the injunction has kept the office from awarding at least 18 conditional adult-use retail dispensary (CAURD) permits thus far, and the commission still has an appeal pending.

There are at least 108 permits that could be issued in those areas, cannabis attorney Michelle Bodian said.

“For every one of the 903 CAURD applicants, this is a step forward and a positive move,” she said, referring to how many retail applications were filed last fall.

New York Gov. Kathy Hochul celebrated the ruling in a statement late Tuesday, and said she was “pleased” at the news.

“This decision will allow New York’s social equity entrepreneurs to open safe, regulated cannabis dispensaries in Central New York, Western New York, the Mid-Hudson Region and Brooklyn,” Hochul said. “For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products. I am committed to ensuring New York continues to lead the nation in our safe and equitable approach to the cannabis market.”

The OCM’s deputy director of legislative affairs, Tahlil McGough, wrote on LinkedIn that the ruling is a “big win for NYS Cannabis.”

“Though this is unfortunate for the Finger Lakes, that litigation continues and has not been resolved on the merits just yet,” McGough wrote.

“What it does mean though is that the OCM can now issue CAURD licenses and open adult-use dispensaries” in the four other regions where action had been stalled, McGough wrote. “The (OCM) has already completed the back-office work of reviewing and scoring all applications for these newly freed regions, and (the Dormitory Authority of the State of New York) has never stopped searching for storefront locations and engaging in limited discussions with potential landlords, so we should not lose any time in getting everything rolling.”

“Everyone involved and everyone impacted should indeed celebrate HARD tonight,” McGough wrote.

Bodian said that from her review of the case, the state argued that because the plaintiff – Michigan cannabis entrepreneur Kenneth Gay and one of his companies, Variscite – selected the Finger Lakes region as its first choice to set up shop, the other four regions should be released from the injunction. The judge agreed, Bodian said.

The bottom line, Bodian said, it clears the way for the OCM to name even more retail license winners than the 66 issued to date, along with another 100 or so expected at the next Cannabis Control Board meeting next week. Bodian said now it’s possible even more retail permits could be awarded at the meeting, which is scheduled for Monday.

But, Bodian noted, it’s still possible the case could ultimately go against New York state.

Gay and Variscite have filed similar lawsuits against the cities of Sacramento and Los Angeles, based on claims that the cities’ social equity marijuana business permitting programs – like New York’s – violate the U.S. Constitution’s dormant commerce clause by excluding him.

All of the cases are still pending. One such lawsuit in Maine was successful last year, but another in Washington state recently was thrown out, meaning federal law is very much unsettled on the question of the dormant commerce clause’s role in the national cannabis trade.

John Schroyer

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