A federal judge on Tuesday partially lifted a temporary injunction barring
regulators from issuing recreational cannabis retail dispensary licenses in five regions of the state. The court lifted the injunction in four areas of the state, allowing the New York Office of Cannabis Management (OCM) to issue licenses for adult-use cannabis dispensaries in those regions. The injunction was left in place for the Finger Lakes region of , however, as a lawsuit challenging the state’s criteria for issuing Conditional Adult-Use Retail Dispensary (CAURD) licenses continues in the federal court system.In August 2022, the OCM announced that the first CAURD licenses would be issued to companies headed by individuals with past convictions for marijuana-related crimes. Successful applicants receive aid from a $200 million Social Equity Cannabis Investment Fund, which was created to help finance the leasing and outfitting of up to 150 recreational marijuana dispensaries across the state. Earlier this month, the agency noted that the number of CAURD licenses would be doubled, bringing the total to 300.
“We think that leaning into folks who are not only justice-involved, but have that business experience means that we’re going to find a bunch of applicants who have gone through some significant challenges to still open and operate successful businesses,” OCM executive director Chris Alexander
when the policy was announced last summer. “We just took a different approach.”To qualify for a cannabis retail license, applicants must be based in New York, as evidenced by a personal or corporate address included on the application. Additionally, a principal applicant or relative must have been convicted of a cannabis-related offense in New York. Those who were arrested but not convicted and those with federal or out-of-state convictions are not eligible.
Lawsuit Filed Against New York Cannabis Licensing Rules
New York’s criteria for obtaining a CAURD license was challenged by Variscite NY One Inc., a company that was denied a retail dispensary license by the OCM. The company is majority owned by Kenneth Gay, who was convicted of a marijuana offense in the state of Michigan. The company’s application was rejected by the OCM, however, because Variscite “is [51%] owned by an individual who has a cannabis conviction under Michigan law” and “has no significant connection to New York,”
in local media.In November, U.S. District Court Judge Gary Sharpe issued a temporary injunction barring the OCM from issuing cannabis retail licenses in the Finger Lakes, Central New York, Western New York, the Mid-Hudson and Brooklyn regions of the state, which Variscite had listed on its application as preferred business locations. Licenses to be issued in 11 other regions, including the Bronx, Manhattan, Queens, Staten Island and Long Island, were not affected by the injunction.
On Tuesday, the United States Court of Appeals for the Second Circuit lifted the injunction for four of the affected regions. With the temporary injunction rescinded in all but the Finger Lakes region of
, the OCM is now free to begin issuing licenses for businesses to set up shop in the other four areas covered by Sharpe’s order. Under the state’s announced plan to distribute CAURD licenses throughout the state, 38 licenses will be issued for businesses in Brooklyn, the Central region will get 14 licenses and Western New York will see 22 licenses, while the Mid-Hudson Region will be the home of 34 CAURD retailers.New York Governor Hails Court Decision
After the
was announced, New York Gov. Kathy Hochul hailed the move as a step forward for marijuana policy reform in the state.“New York’s brand-new cannabis industry is making significant progress to promote social equity and right the wrongs of the past, creating the fairest and safest market in the nation,” Hochul
on Tuesday. “This decision will allow New York’s social equity entrepreneurs to open safe, regulated cannabis dispensaries in Central New York, Western New York, the Mid-Hudson Region and Brooklyn. For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products. I am committed to ensuring New York continues to lead the nation in our safe and equitable approach to the cannabis market.”Michelle Bodian, a partner at the cannabis and psychedelics law firm Vicente LLP, hailed the lifting of the injunction in a statement to High There.
“CAURD applicants in the previously enjoined regions have reason to celebrate today,” she wrote in an email. “Now that the legal barrier preventing them from being awarded a license has been removed, they are back on track to eagerly awaiting word from the state whether they’ll be able to open up a dispensary in New York.”