New York Court Reverses Order, Leaving 30 Dispensaries Previously Approved Back in Limbo

For people working to launch licensed businesses in New York’s adult-use cannabis market, the hits just keep on coming.

On Aug. 18, Albany County Supreme Court Judge Kevin R. Bryant announced that adult-use retail licenses that met specific requirements would be exempt from a preliminary injunction issued earlier in August that halted New York Office of Cannabis Management (OCM) regulators from awarding more licenses or approving dispensary openings.

While that left 410 conditional adult-use retail dispensary (CAURD) licensees still in limbo, more than two dozen businesses were told Aug. 23 they could move forward with their grand openings, partly because their approvals came before the Aug. 7 injunction.

READ MORE: New York Court Names 30 Dispensaries Allowed to Open; 410 Others Up Creek With No Paddle

Less than a week later, that all changed. Bryant reversed course this week and now all CAURD licensees that haven’t opened their business are on hold, including 30 who were told they’d be exempt from the injunction.

This back-and-forth originated with a lawsuit four service-disabled veterans filed on Aug. 2. They argue that the OCM violated state cannabis law because its social equity licensing policies excluded licensing opportunities to them and other groups.

The lawsuit effectively put the already sluggish program on hold.

READ MORE: Court Orders New York to Halt New Adult-Use Dispensary Licenses

OCM compiled and submitted a list of 30 licensees that it believed should be able to continue with their business plans and grand openings despite the ongoing litigation, as the suspension would cause irreparable harm and economic losses. The court said it would allow companies that “met all requirements for licensing, including but not limited to site plan approval from the [OCM’s Cannabis Control Board] and, where applicable, from local municipalities” to move forward.

However, the plaintiffs in the lawsuit filed an objection Aug. 24, noting that “Defendants did not file supporting underlying documentation, and Plaintiffs have not yet had the opportunity to conduct discovery on this issue. In the absence of supporting documentation and discovery, Plaintiffs presently lack the information needed to determine whether each applicant on the List has in fact met all requirements for licensure.” They also noted in the objection that they should be permitted “to raise a challenge to such applicant’s continued exclusion from the preliminary injunction."

In response to the objections, Patrick McKeage, the first deputy director of OCM, filed an affidavit, noting that the OCM has been unable to process the 30 provisional licensees’ post-selection applications since Aug. 7, when the injunction was filed. “Nevertheless, it is apparent from these applications that many of these provisional licensees are ready to open their dispensaries now,” McKeage wrote. “Most have completed all licensing tasks and some are only finalizing the construction and buildout of their retail dispensary locations to meet the requirements of the adult-use cannabis program.”

But Judge Bryant wrote in a new order dated Aug. 28 that the affidavit leaves “significant questions as to whether the licensees on the list have actually met all requirements.”

“It is clear to this Court upon review of the affidavits that OCM failed to comply with this Court’s Order regarding exemptions to the injunction,” Bryant wrote in the order, which was filed Aug. 30. “They have submitted a list which, by their own admission, includes licensees who are still finalizing construction and whose post-selection inspections have not been scheduled or completed. It is also clear that an unclear number of the sites have not been inspected to ‘ensure [the site] meets all the public health and safety requirements in the Cannabis Law and associated regulations.’”

Because the court was not able to determine if the 30 identified licenses have completed all post-selection requirements and selections, the court will not lift the injunction as originally proposed for the 30 business hopefuls. Moving forward, all licensees will be assessed “promptly” on a “case-by-case” basis, he wrote.