Multi-State Operators Sue New York Over Licensing Discrimination
March 21, 2023A group of large cannabis companies has filed suit against New York’s Office of Cannabis Management (OCM) and Cannabis Control Board (CCB), alleging unconstitutional overreach and policymaking, egregious abdication of duties, and actions that put New Yorkers’ health and safety at risk. The suit, first reported by the Syracuse Post-Standard, was filed in Albany County Supreme Court.
The suit was filed by the Coalition for Access to Regulated & Safe Cannabis (CARSC), which describes itself as an unincorporated trade association, whose membership includes Acreage Holdings, PharmaCann, Green Thumb Industries, and Curaleaf, as well as some dispensary owners and medical license holders. At the core of the group’s complaint is the choice made by regulators to reserve the first 150 recreational cannabis licenses for social equity applicants, which shut out big companies for the foreseeable future. All four of the named companies are among the 10 vertically integrated cultivators and medical retailers who hoped to leverage that position toward early recreational storefronts.
By reserving the first 150 retail licenses for a specific class of applicant (66 have been issued to date), the OCM and CCB are violating the letter of the law that legalized cannabis, the suit alleges. That law specifies that “the initial adult-use cannabis retail dispensary license application period shall be opened for all applicants at the same time.”
“Rather than perform the tasks required by the MRTA—which would promote a safe and regulated cannabis industry for medical patients and adult-use consumers alike—CCB and OCM have improperly assumed the role of the Legislature to impose their own policies over those of New York’s elected officials and, by extension, their constituents,” the suit alleges.
The lawsuit follows a similar filing from last October that challenged the prioritization of social-equity applicants on Dormant Commerce Clause grounds, the constitutional doctrine regarding undue burden on interstate commerce. That lawsuit led a judge to pause all licenses being issued in five regions, leading to the situation now where only four cannabis retail locations have opened statewide, three of which are in Manhattan. That litigation is ongoing.
CARSC’s lawsuit is seeking a declaration that the social-equity applicant arrangement is unconstitutional and beyond the agency’s legal authority. Further, they want to force regulators to levy civil injunctions against the hundreds of unlicensed cannabis stores now operating. Lawmakers are currently considering changes to the legalization law that would give the state the authority to shut down unlicensed shops, as well as streamline the tax structure.—Danny Sullivan
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