New York Supreme Court Lifts Marijuana Licensing Blockade, Allowing Regulators To Process Hundreds Of New Retailers

The New York Supreme Court has officially lifted an injunction that’s barred state marijuana regulators from processing hundreds of new retailer licenses, clearing the path to significantly expand the state’s cannabis market.

The court action comes days after the New York Cannabis Control Board (CCB) approved settlement agreements in two lawsuits that have enjoined regulators from moving ahead with licensing since August.

“This decision brings much needed relief to the hundreds of provisional licensees who, until now, have had their businesses sidelined,” CCB Chair Tremaine Wright said in a press release on Friday. “We remain dedicated to upholding a fair and transparent process as we continue to grow and support New York’s cannabis industry.”

One of the lawsuits that’s been resolved under the approved 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.

In exchange for dropping the suit, regulators agreed to grant each of the four plaintiffs a provisional adult-use cannabis retailer license at a site that they’ve pre-selected. (One of the plaintiffs has not yet chosen a location). The state further agreed to pause approvals on any additional conditional licenses until April 2024 in the interest of focusing attention on processing the current backlog. Also, CCB will be establishing a Service-Disabled Veteran-Owned Business task force responsible for promoting veteran participation in the marketplace.

The other lawsuit that’s now been settled—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.

Accordingly, regulators accepted the terms of a settlement that the court approved, which means they will grant adult-use licenses to the five registered organizations behind the lawsuit.

“Today is a good day for New York, for the dream of equity in cannabis, and for every New Yorker hoping to have a legal, licensed cannabis dispensary in their community,” Office of Cannabis Management (OCM) Executive Director Chris Alexander said. “New York is the only state in the nation where those harmed by prohibition, including non-profits serving formerly incarcerated individuals, are the building blocks of our cannabis industry, and we are immensely proud of this.”

“I’m also deeply relieved for the many entrepreneurs, who have spent the last three months trapped in limbo, who are now able to open their cannabis businesses, and for our communities, which will soon begin to see more stores open faster,” he said. “We never stopped fighting for the licensees whose applications can now move forward, and we’ll always continue to support them.”

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

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

In October, 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.

This week, the governor additionally approved legislation that will allow hemp seeds to be included in animal feed for pets, horses and camelids such as llamas and alpacas.

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.

Photo elements courtesy of rawpixel and Philip Steffan.