New York Marijuana Regulators Approve Settlement Agreements To End Months-Long Business Licensing Blockade

New York marijuana regulators have approved settlement agreements that could soon allow hundreds of cannabis businesses that have been blocked from opening amid litigation to finally begin operations.

At a meeting of the Cannabis Control Board (CCB) on Monday, members accepted the terms of settlement for two lawsuits, though they declined to disclose details. The agreements must still be formally accepted by the state Supreme Court before the injunction is lifted.

BREAKING: The #NYCCB approved agreement terms in hopes of continuing the CAURD program.

If the NYS Supreme Court approves the agreement terms, it will mark the end of the injunction and spark a new wave of #NYcannabis dispensary openings.

— NYS Office of Cannabis Management (@nys_cannabis) November 27, 2023

One of the lawsuits that would be resolved under the settlement—Carmine Fiore, et al v. New York State Cannabis Control Board—was filed by a group of military veterans who argued that the state’s licensing prioritization of social equity applicants who were most impacted by criminalization unconstitutionally omitted disabled veterans from the eligibility pool.

The other lawsuit—Coalition for Access to Regulated & Safe Cannabis v. New York State Cannabis Control Board—was brought by existing medical cannabis operators and prospective adult-use applicants. It similarly asserted that regulators were misapplying the state’s marijuana law, and they argued that current medical marijuana businesses should qualify for licensing immediately as well.

The settlement resolution was been on the CCB agenda for its last meeting earlier this month, but members didn’t act until Monday’s special meeting.

“Some 436 professional licensees have had their business planning and rollout halted to a dead stop,” Tremaine Wright, chair of the CCB, said at Monday’s meeting. “New York state cannabis licensees throughout the supply chain have similarly been impacted by the delay of the retail rollout.”

An attorney for the state emphasized that “nothing can happen until the court approves these agreements.” But once that does happen, “the injunction that has been in place will be lifted” and “the current program that has been stalled will be able to move forward.”

Chris Alexander, executive director of the Office of Cannabis Management (OCM), said in a press release on Monday that the state is now “one step closer to resolving litigation brought forth by equity entrepreneurs and our medical operators who felt that they were being left behind.”

As it stands, there are only about two dozen licensed marijuana retailers in the state. Meanwhile, despite the injunction, regulators did open the application period for hundreds of new general marijuana business licenses last month.

“Now that we have opened up licensing to all equity entrepreneurs and provided a clear pathway to participation in the adult-use market for our medical operators, we are able to continue to move this program forward together,” OCM’s Alexander said.

“New York’s cannabis market was designed to be the most equitable market in the world,” he said. “We remain undeterred by the challenges of standing up that new market, and believe that the expansion of licensing opportunities and the inclusion of our medical operators will collectively ensure the success of the adult-use program and the expansion of the medical program.”

Amid the protracted rollout, illicit cannabis operators have proliferated across the state, prompting the governor to announce that they would be “ramping up” enforcement.

Late last month, the New York Senate Cannabis Subcommittee, which was established in April and is being chaired by Sen. Jeremy Cooney (D), heard from witnesses and discussing potential legislative solutions to the state’s ongoing cannabis legalization implementation problems.

Meanwhile, Gov. Kathy Hochul (D) recently signed legislation that attempts to make it somewhat easier for financial institutions to work with state-licensed cannabis clients.

She also signed a separate bill that’s meant to provide tax relief to New York City marijuana businesses that are currently blocked from making federal deductions under an Internal Revenue Service (IRS) code known as 280E.

While Hochul signed a an earlier budget bill last year that included provisions allow state-level cannabis business tax deductions—a partial remedy to the ongoing federal issue—New York City has its own tax laws that weren’t affected by that change. The new measure is meant to fill that policy gap.

As part of the state’s effort to speed consumer access to legal marijuana, regulators also launched a program, known as the Cannabis Growers Showcase (CGS), an initiative of OCM that allows licensed growers and processors to sell directly to consumers.

Regulators voted to approve that program in July and quickly began accepting applications. The first pop-up event kicked off in the Hudson Valley in August, and another was held down the road from this year’s state fair.

In September, 66 state lawmakers—about a third of the entire state legislature—also wrote to Hochul urging her to sign a bill that would allow licensed marijuana producers to sell products to tribal retailers. The plan would offer a release valve to hundreds of cannabis farmers who are currently sitting on surpluses but have no place to sell their products.

Meanwhile, New York regulators are working to debunk what they say is the “false” narrative that cannabis is commonly contaminated with fentanyl—a “misconception” that remains “widespread” despite a lack of evidence. OCM recently put out a factsheet on the issue, acknowledging that while fentanyl has been found in drugs like MDMA and heroin, anecdotal claims about marijuana laced with the potent opioid are so far unfounded.

The state’s Office of Addiction Services and Supports (OASAS) also recently revised guidance around THC testing for people in treatment for substance use disorder, advising marijuana screening only in cases where “the patient has identified a reduction in, or cessation of cannabis as part of their treatment goals.”

Last week, on the post-Thanksgiving Black Friday, regulators encouraged people to take advantage of the deals and support small businesses by shopping for cannabis at licensed retailers.

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