A state Supreme Court Justice issued a stern ruling Aug. 18 criticizing the state’s legal cannabis program and stopping it from issuing new retail licenses.

State Supreme Court Justice Kevin R. Bryant ruled a veterans group was likely to be successful in its lawsuit alleging regulators acted unconstitutionally by prioritizing cannabis retail licenses for those with past cannabis convictions or family members with past cannabis convictions. While the Marijuana Regulation and Tax Act (MRTA) prioritizes “social and economic equity applicants” that would include service-distressed veterans, the veterans group claims regulators are prioritizing a narrower pool of applicants.

“Plaintiffs have presented persuasive and compelling authority in support of their argument that Defendants failed to follow the clear language of the applicable legislation,” Judge Bryant noted.

The veterans’ group claims the licensing framework is more restrictive than legislators intended and restricts cannabis licenses from disabled veterans and other minority groups.

Bryant’s ruling agreed, saying regulators veered from the language of the 2021 Marijuana Regulation and Tax Act.

“In determining this application, this Court must follow the well-accepted rules of statutory construction. In this regard, it is well accepted that as “the clearest indictor of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof … Additionally, where a statute describes the particular situations in which it is to apply and no qualifying exception is added, an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded…When the Legislature enacted the statutes and when the Governor signed them into law. they stood for what their words manifested and not the inner thoughts of a draftsmen or advisor. After all, it was the words, not the thought which were to influence the conduct of others.”

Bryant’s injunction does not apply to pending applicants who met all licensing approvals prior to Aug. 7.

Judge Critical of New York Cannabis Regulators

While issuing an injunction halting new retail licenses, the judge criticized the Office of Cannabis Management and Cannabis Control Board of moving forward with its licensing program despite numerous legal challenges to its fairness.

“This Court also notes that 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,” he wrote.

He also ordered the regulators to promptly finalize their marijuana regulations.

Lawsuits have hindered the rollout of a legal cannabis program that was expected to generate billions of dollars. A lawsuit similar to the veterans’ 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.

And, in Oct. 2022, a lawsuit filed by Variscite NY One 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 license.

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.

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.

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:

New York Cannabis Retail Licenses Once Again Blocked by Courts

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?