NY Cannabis Licensing Stalled Amid Legal Disputes

LOS ANGELES — in a recent development that adds to the ongoing complexities surrounding the launch of licensed businesses in New York’s adult-use cannabis market, Albany County Supreme Court Judge Kevin R. Bryant has reversed an earlier decision that allowed certain businesses to proceed with their grand openings. This decision comes amidst a lawsuit filed by four service-disabled veterans who argue that the New York Office of Cannabis Management’s (OCM) social equity licensing policies have excluded them and other groups from licensing opportunities, thereby violating state cannabis law.

Initially, on August 18, Judge Bryant had stated that adult-use retail licenses that met specific criteria would be exempt from a preliminary injunction issued earlier in the month, which had prevented the OCM from granting more licenses or approving the opening of new dispensaries. This exemption would have allowed over two dozen businesses, whose approvals were granted before the August 7 injunction, to commence operations.

However, in a sudden turn of events, Judge Bryant reversed this decision within a week, putting all conditional adult-use retail dispensary (CAURD) licensees that haven’t yet opened their businesses on hold. This includes 30 businesses that were previously informed they would be exempt from the injunction.

This legal tussle began with a lawsuit initiated on August 2, which has significantly slowed down an already sluggish program. In an attempt to mitigate economic losses and potential irreparable harm, the OCM had submitted a list of 30 licensees that it believed should be allowed to continue with their business plans and grand openings. The court had initially agreed to permit companies that had met all the necessary requirements, including approvals from the OCM’s Cannabis Control Board and relevant local authorities, to proceed.

However, the plaintiffs filed an objection on August 24, pointing out the lack of supporting documentation and the need for further discovery to ascertain whether the applicants on the list had indeed met all the prerequisites for licensure. They also argued for the right to challenge any applicant’s exclusion from the preliminary injunction.

Responding to these objections, Patrick McKeage, the first deputy director of the OCM, acknowledged that the processing of post-selection applications for the 30 provisional licensees had been halted since the filing of the injunction on August 7. Despite this, McKeage noted that many of these licensees were ready to open their dispensaries immediately, with most having completed all necessary licensing tasks.

However, in a new order dated August 28, Judge Bryant highlighted significant uncertainties regarding the actual readiness of the licensees on the list. The judge criticized the OCM for failing to comply with the court’s order concerning exemptions to the injunction, noting that the submitted list included licensees who were still in the process of finalizing construction and had not yet completed or scheduled post-selection inspections. Due to these unresolved issues and the inability to confirm compliance with public health and safety requirements stipulated in the cannabis law and associated regulations, the court has decided not to lift the injunction for the 30 businesses initially considered for exemption.

As the situation unfolds, Judge Bryant has indicated that all licensees will now be evaluated “promptly” on a “case-by-case” basis, adding another layer of complexity to New York’s fledgling adult-use cannabis market. This development underscores the intricate legal and regulatory hurdles that continue to plague the industry, as stakeholders eagerly await clearer directives and a resolution to the ongoing litigation.