New York Supreme Court Justice Kevin Bryant issued a temporary restraining order blocking new marijuana retail licenses in the wake of a lawsuit filed by a group of service-disabled veterans.

The temporary restraining order (TRO) blocks the state’s Office of Cannabis Management and Cannabis Control Board from issuing new licenses until at least the next court hearing on Aug. 11. The veterans’ group alleges the regulators acted unconstitutionally by prioritizing licensing for those with past cannabis convictions or family members with past cannabis convictions. While the law prioritizes “social and economic equity applicants” that would include service-distressed veterans, the group claims regulators are prioritizing a narrower pool of applicants.

The veterans’ group claims the licensing framework is keeping cannabis licenses from disabled veterans and other minority groups.

A similar lawsuit was filed in March by the Coalition for Access to Regulated & Safe Cannabis, described as “an unincorporated trade association” composed of registered organizations, several of which plan to apply for a dispensary license to sell cannabis legally. The group includes several major national sellers, such as Acreage Holdings, PharmaCann, Green Thumb Industries and Curaleaf.

Slow Roll Out of Legal Marijuana Market Continues

The new order is another roadblock in the state’s attempt to roll out its legal cannabis market. While adult use cannabis has been legal in New York State for more than two years, legal retailers are in short supply, primarily due to the many obstacles the Office of Cannabis Management encountered while drafting and attempting to implement the proposed regulations.

While only a few dozen adult retail shops are open, the first to open, Housing Works Cannabis in New York City, reports selling $12 million worth of product in six months. Meanwhile, the illicit marijuana market thrives.

The state prioritized people harmed by marijuana enforcement so they could reap the financial benefits of legalization.

But, lawsuits have hindered the program’s rollout. In addition to the March lawsuit by the coalition, a lawsuit filed by Variscite NY One in October 2022 resulted in a federal district judge preventing the Office of Cannabis Management from issuing licenses in five areas of the state (Finger Lakes, Central New York, Western New York, Mid-Hudson, and Brooklyn). That lawsuit alleges the CAURD program violates the Dormant Commerce Clause, which prevents states from passing legislation that discriminates against or excessively burdens interstate commerce. The court’s injunction was lifted in March, around the time the Office of Cannabis Management announced an ambitious plan to double the number of retail licenses.

But the August 7 lawsuit will again slow those plans. An upcoming hearing is scheduled for August 11 at the Ulster County Supreme Courthouse in Kingston, N.Y.

On August 8, the Coalition for Access to Regulated & Safe Cannabis submitted a letter to Judge Bryant requesting the Court to either “(i) maintain the TRO in place until the Court decides the competing motions for summary judgment in the Coalition Suit… or (ii) permit [the Coalition’s attorneys] to appear on behalf of the Coalition and to be heard at the hearing scheduled for August 11, 2023, on the limited question of the CAURD program’s constitutionality (or lack thereof).”

If successful, the recent action could force New York to immediately open the market to more than just CAURD applicants, allowing thousands of licensee hopefuls to apply for a cannabis license.

Attorneys with Harris Beach’s Cannabis Industry Team continue to monitor developments in the fast-moving New York cannabis industry. If you have questions about this lawsuit or related matters, please reach out to attorney Meaghan T. Feenan at (518) 701-2742 and mfeenan@harrisbeach.com, attorney William M.X. Wolfe at (315) 214-2059 and wwolfe@harrisbeach.com, or the Harris Beach attorney with whom you most frequently work.

For more insights from our marijuana attorneys, please read:

• Office of Cannabis Management Releases Guidance for Cannabis Growers Showcases
• Last-Minute Authorization Keeps New York Marijuana Supply Chain Open
• Proposed Legislation Designed to “Stabilize and Bolster” New York’s Cannabis Market
• New York Approves New Cannabis Licenses and Revised Regulations
• Will New York’s Cannabis Crop Rescue Act Pit Cannabis Retailers Against Cultivators?
• Court Lifts Injunction Barring Cannabis Retail Licenses for Four of Five New York Regions
• New York Sued Again on Cannabis Dispensary Licenses
• Federal Appeal Could Influence New York Cannabis Licensing for Rest of 2023
• U.S. District Court Upholds Washington State’s Residency Requirements for Cannabis Industry
• Uncertainty Within New York’s Cannabis Market Continues Amidst Judge’s Latest Decision
• Is Interstate Commerce Coming For The Cannabis Industry?