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.”