A New York state judge on Friday granted a preliminary injunction against the state’s conditional adult use retail dispensary (CAURD) licensing program, finding that cannabis regulators exceeded their legal authority by creating a new licensing class that excluded specific minorities who were prioritized in the 2021 state law that legalized recreational marijuana.
The order, issued by Judge Kevin Bryant of the Albany Supreme Court, prevents the New York Office of Cannabis Management and the Cannabis Control Board from further processing or awarding more marijuana retail permits. But it does carve out exceptions for many of the license winners who have already passed basic inspections and are ready to open.
The order came at the request of four service-disabled veterans who filed suit against the state in early August, claiming they were wrongly shut out of the retail licensing that has been going on since last year. The injunction follows an initial temporary restraining order Bryant issued on Aug. 7, effectively extending the licensing pause indefinitely.
The new injunction means that at least some of the 463 CAURD license holders – though it’s unclear how many – will still join the 23 operational retailers in New York while the underlying legal case continues to work its way through the courts. But the entire CAURD program could now be in jeopardy, Bryant signaled in his order.
“Defendants are hereby enjoined from further processing, approving, or investigating pending applications for CAURD licenses,” Bryant wrote in his Friday order. “This injunction does not apply to any licensees who, prior to August 7, 2023, met all requirements for licensing, including but not limited to site plan approval from the CCB and, where applicable, from local municipalities.”
Bryant also wrote that he will consider further requests for exception for CAURD licensees who are attempting to open their businesses on a case-by-case basis.
The judge further ordered that the OCM must provide a list of CAURD retailers by Aug. 22 that are eligible under the injunction standards to open for business. The next hearing in the case is scheduled for Aug. 25.
Bryant also ordered the Cannabis Control Board to convene a meeting “forthwith to begin finalizing applicable regulations for Adult Use Cannabis Licenses as set forth in Article 4 of the MRTA,” which includes service-disabled veterans such as the four plaintiffs, as well as minority- and women-owned businesses and distressed farmers, according to the Marihuana Regulation and Taxation Act.
The judge blasted the OCM for its decision to both create the CAURD program and to move forward earlier this year with licensing despite two separate legal challenges that could ultimately render the entire program void. First was the Variscite case, which halted some retail licensing for months before ultimately being settled out of court. The second was a lawsuit from the Coalition for Access to Regulated and Safe Cannabis (CARSC), a suit that Bryant noted was filed before the Variscite case was settled.
“It was Defendant that decided to move forward and accelerate the CAURD program in the face of unresolved litigation and they were undeniably on notice of the alleged constitutional defects at issue,” Bryant wrote. “Despite this notice, Defendants encouraged potential licensees to incur significant expenses in reliance on a program that Defendants knew was at issue in pending litigation.”
Bryant wrote that he was following the lead of the federal court that issued an injunction in the Variscite case last year, which left unresolved the underlying legal questions it raised about the OCM’s actions and creation of the CAURD program. Bryant wrote that he thought the odds were in the veterans’ favor.
“Defendants failed to follow the clear language of the applicable legislation,” Bryant wrote. “The controlling words that appear in the MRTA are clear and unambiguous.”
That language, Bryant wrote, was that the retail license period “be open to all applicants at the same time,” and that the OCM had no legal authority to create CAURD licenses, since those permits were not explicitly enumerated in state law.
A spokesman for the four plaintiffs in the case wrote in an email to Green Market Report that the injunction “will help put the state back on track.”
“OCM has resoundingly failed to create the legal cannabis market envisioned by New York’s (MRTA), in large part by keeping licenses out of the hands of service-disabled veterans and other minority groups the law prioritizes,” the plaintiffs said in the statement. “Every day that the adult-use program was limited to only the CAURD program was another day the MRTA-designated priority groups and New York State farmers were left out in the cold. We remain steadfast in our responsibility to fight for all the social equity priority groups being overlooked right now by the OCM through the CAURD program.”
“We look forward to working with the State and the Court to open the program to all eligible applicants,” the statement concluded.
A spokesman for the CARSC, Rev. Kirsten John Foy, said in an emailed statement that the injunction is “an unfortunate, but also inevitable, result based on OCM leadership’s abject refusal to heed the court’s directive to negotiate a universal settlement with all involved parties.”
“The Coalition continues to believe that a solution to this problem can be reached if everyone comes to the table and negotiates in good faith with the intention of helping all current and potential stakeholders in New York’s nascent cannabis market flourish. This is a suggestion that the Coalition has repeatedly endorsed and offered, and which has been repeatedly ignored by the Hochul administration,” Foy said.
The CARSC includes several of New York’s 10 licensed medical cannabis companies that are also multistate operators, including Acreage Holdings, Curaleaf, Green Thumb Industries and PharmaCann.
State Sen. Jeremy Cooney, a Democrat who serves on the Senate Subcommittee on Cannabis, promised “legislative action very soon” in a statement released Friday afternoon.
“Today’s decision can only be described as a deep disappointment, especially for those conditional retail applicants who have waited months and incurred significant costs, risking their livelihoods,” Cooney said, adding that the state “must aggressively pursue” the goals of social equity and repairing harms wrought by the war on drugs.
“This lawsuit has shined a spotlight on the shortcomings of New York’s rollout of the adult-use program, and we will be announcing legislative action very soon,” Cooney said.
On Monday morning, OCM spokesman Trivette Knowles wrote in an emailed statement to Green Market Report, “The Office of Cannabis Management’s mission is to establish a first-of-its-kind, adult-use cannabis market that works to right the wrongs of the past, and we are proud of the work we’ve done to achieve that goal.”
“We are reviewing the recent Court decision and will be in touch with all licensees to discuss the path forward but we will absolutely apply to the Court for exemptions from the injunction on behalf of provisional licensees who are ready to open as we work to provide access to safer, tested cannabis products,” Knowles wrote. “While today’s ruling is a disappointment, we are committed to working with the Cannabis Control Board to find a way forward that does not derail our efforts to bring the most equitable cannabis market in the nation to life.”