The Office of Cannabis Management’s (OCM) plan to double the number of conditional adult-use retail cannabis licenses (“CAURD” licenses) got some teeth yesterday when a federal court lifted an injunction barring CAURD licenses from being issued.

A three-judge panel for the U.S. Court of Appeals, Second Circuit in Manhattan lifted the injunction in the Central New York, Western New York, Mid-Hudson and Brooklyn regions. The injunction remains in the Finger Lakes region, which was listed as the top geographic preference by Michigan-based Variscite NY One when it filed a lawsuit challenging the state’s requirement that initial licenses be provided to those with New York convictions. Varascite’s primary owner has a conviction for a marijuana-related offense, but in the state of Michigan.

That lawsuit led U.S. District Court Judge Gary Sharpe to issue an injunction barring the issuance of CAURD licenses in five regions of the state back in November.

New York Governor Kathy Hochul praised the federal appellate court’s decision to lift the injunction.

“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,” she 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.”

New York legalized marijuana for recreational use in March 2021, with an eye toward prioritizing licensure for those convicted of the state’s strict cannabis-related laws, referred to as “justice involved” applicants. The first licensees are eligible for funds from a $200 million state fund established to secure and renovate retail locations.

Variscite argued that requiring licensees to have a cannabis-related conviction and significant ties to New York violated constitutional protections. Judge Sharpe felt the argument had merit and granted a preliminary injunction, which after several months, has been lifted for most of New York State

Harris Beach’s Cannabis Industry Team of New York attorneys continues to monitor developments in the states fast-moving cannabis industry. For more information, please contact Meaghan T. Feenan, who advises organizations of all structures on developments within the Marijuana Regulation and Taxation Act (MRTA), including cultivators and processors, retailers, and distributors. She’s a frequent speaker on Cannabis topics and regularly publishes articles about the licensing process and legislative updates.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.

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