Delays in rolling out New York retail cannabis dispensary licenses prompted one legislator to introduce a bill to allow the state’s struggling cannabis cultivators to sell directly to consumers.

The Cannabis Crop Rescue Act – introduced by State Assemblywoman Donna Lupardo on 4/20/23 – would allow cannabis farmers to sell their own or another licensed cultivator’s product directly to consumers until Sept. 30, 2023. It also authorizes the state’s Office of Cannabis Management to create a loan or grant program to help cultivators process cannabis into distillate.

If voted into law, the act would sow competition between adult use retail establishments and growers. But it would be short lived, with farmers forced to gear up for a retail presence over the next few months, only to shut it down by Sept. 30.

Lupardo said she introduced the bill because the state’s farmers are floundering after legal and other delays have limited the number of outlets to sell their products.

Legal Delays Slowed Retail Cannabis Dispensaries

After a favorable court ruling in late March lifted an injunction barring conditional adult-use retail cannabis licenses in several regions of the state, New York officials announced plans to double the number of planned dispensaries from 150 to 300. But it will take weeks, if not months, to get those through the approval process. Lupardo’s proposed legislation could allow cultivators to sell immediately and fill the gap in the meantime

New York passed the Marijuana Regulation and Taxation Act in March 2021, legalizing marijuana for recreational use and 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.

But New York’s been sued twice over the residency requirements. In addition to the lawsuit that led to the injunction, which alleged violation of the Dormant Commerce Clause that prohibits states from passing legislation discriminating against interstate commerce, a New York-based coalition accused the state’s Office of Cannabis Management and Cannabis Control Board of “unconstitutional overreach” in its management of the state’s legalized cannabis effort and asked a judge to immediately open up licensing to all retail dispensary applicants.

The group, Coalition for Access to Regulated & Safe Cannabis, describes itself as “an unincorporated trade association” composed of registered organizations, several of which plan to apply for a dispensary license to legally sell cannabis. Included in the group are several major national sellers, such as Acreage Holdings, PharmaCann, Green Thumb Industries and Curaleaf.

The lawsuit, filed in the Supreme Court of the State Court of New York, Albany County, claims the state’s Conditional Adult-Use Retail Dispensary (CAURD) licensing process contradicts the intent of the 2021 law by creating a new license class, violating the law’s provision the application period be open to “all applicants at the same time,” the group contends.

Meanwhile, a “gray” marijuana market thrives as dispensary openings are delayed.

The regulatory landscape for the cannabis industry is still very much unsettled. Harris Beach’s Cannabis Industry Team continues to monitor developments in the fast-moving New York cannabis industry. For more information, please contact William M. X. Wolfe at (315) 214-2059 and wwolfe@harrisbeach.com, attorney Meaghan T. Feenan at (518) 701-2742 and mfeenan@harrisbeach.com, or the Harris Beach attorney with whom you most frequently work.

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.

For more insights into the Cannabis Industry please read:

• 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?