New York is opening up its cannabis market to cultivator, processor, distributor, microbusiness and retail dispensary applicants beginning Oct. 4, a move that could finally spur significant sales, but one criticized by some as detrimental to the state’s social equity efforts.
On Sept. 12, the state’s Cannabis Control Board (CCB) approved final rules and regulations for licensing plant nurseries, cultivators, processors, cooperatives, distributors, dispensaries, delivery services and microbusinesses. The board also approved opening the application period for most non-conditional adult-use license types.
Those wishing to apply for a cultivator, processor, distributor, microbusiness or retail dispensary license can do so from Oct. 4 until Dec. 4. The state’s Office of Cannabis Management will begin reviewing and approving retail dispensary applicants who already have a location secured by Nov. 3.
“Today marks the most significant expansion of New York’s legal cannabis market since legalization, and we’ve taken a massive step towards reaching our goal of having New Yorkers being able access safer, regulated cannabis across the state,” said Chris Alexander, executive director of the Office of Cannabis Management. “The regulations finalized today are the result of robust engagement with stakeholders across the State who submitted thousands of comments. This final package truly represents the values of equity and competition that we believe are central to this market.”
The Board hopes the retail market will quickly expand with the submission of new applicants.
But, while the state’s decision to open the application portal is good news for a market stagnating under legal challenges and other delays, it was met with criticism by some in the industry. The public comment period following the decisions lasted more than two hours, as many involved in the industry voiced concerns and criticisms that opening licensure to out-of-state big businesses and even in-state medical marijuana Registered Organizations was unfair to small growers and dispensaries promised priority in New York’s social equity efforts.
Program Rollout Plagued by Delays and Lawsuits
Currently, to qualify for retail licenses under the Conditional Adult-Use Retail Dispensary (CAURD) license program, applicants must be “justice involved”— having a past cannabis-related conviction or having a family member with a past cannabis-related conviction.
But those applicants have been unable to gain traction in a market projected to generate billions of dollars because of legal challenges to the program’s roll out. Just last month, a state Supreme Court Justice issued a stern ruling criticizing the state’s legal cannabis program and stopping it from issuing new Conditional Adult- Use 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 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 and is more restrictive than legislators intended. This matter is scheduled for another hearing on Sept. 15.
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.
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.
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 email@example.com, attorney William M.X. Wolfe at (315) 214-2059 and firstname.lastname@example.org, or the Harris Beach attorney with whom you most frequently work.
For more insights from our marijuana attorneys, please read: