Latest Variscite Case Amplifies New York Market Uncertainty

The lawsuit is nearly identical to the case filed in 2022 that stalled licensing in five New York regions.

A federal lawsuit filed just a week before Christmas that challenges New York’s recreational market rollout was updated over the holiday break, when attorneys for the plaintiffs formally requested a temporary restraining order and a preliminary injunction to force the court to act quickly on another potential retail licensing freeze.

If granted, the request, filed by attorneys for companies Variscite Four and Variscite Five, could mean a repeat in the near future of the months-long delays that plagued the New York rollout in 2023, said attorney Neil Willner.

Willner said if the court sides with the plaintiffs – as it did in August, when a state judge issued a preliminary injunction halting new dispensary openings – that could mean more costly delays for hundreds of the conditional adult use retail dispensary (CAURD) licensees and for winners in the general application window, which closed the same day the lawsuit was filed, Dec. 18.

“I feel so bad for those CAURD folks. They’ve just gone through hell throughout this process, and to see them possibly have a hold put on again a month after the OCM settled the Fiore lawsuit, my heart goes out for them,” Willner said, referring to the August lawsuit that led to the injunction that was lifted at the end of November last year.

Though Willner said it’s quite unclear yet what will happen with the case, he said the legal arguments are nearly “identical” to those presented in another case filed in late 2022, which also resulted in CAURD licensing delays in five regions across New York until that case was settled in May 2023.

The problem, Willner said, is that the settlement never resolved the actual legal issues, which leaves the door open for the new lawsuit, and potentially even more, because the latest action doesn’t target processors or cultivators.

“They’re asking for an injunction just on retail, because of this ‘extra priority’ New York requirement. If they are successful here, that opens the door for a processor applicant or a cultivator applicant to do the exact same thing,” Willner said. “I am surprised we haven’t seen more lawsuits than we have, because of all the settlements that the OCM has entered into to resolve these.”

The ongoing episode illustrates what many in the national cannabis trade have known for years, Willner said: Litigation often still works in limited-license markets such as New York, which is why the industry sees so many in new cannabis markets.

That’s something that businesses need to factor into their plans when laying the groundwork for new ventures.

“It’s a lesson certainly for applicants and for investors who are looking to get into new markets, that litigation is a very, very real issue that you need to account for,” Willner said. “Litigation can hold up licensing for months or years, and that’s what we’re seeing play out in real time in New York.”

John Schroyer

John Schroyer has been a reporter since 2006, initially with a focus on politics, and covered the 2012 Colorado campaign to legalize marijuana. He has written about the cannabis industry specifically since 2014, after being on hand for the first-ever legal cannabis sales on New Year’s Day that year in Denver. John has covered subsequent marijuana market launches in California and Illinois, has written about every aspect of the marijuana trade, and was part of the team that built the cannabis industry’s first-ever trade show, MJBizCon. He joined Green Market Report in 2022.


One comment

  • Alex

    January 8, 2024 at 11:54 am

    Why would CAURD be affected when Variscite is suing the Adult Use License and SEE portion.

    Reply

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