4 New York Regions No Longer Under Injunction Blocking Cannabis Retail Licenses

New York cannabis regulators can now proceed in issuing up to 54 adult-use cannabis retail licenses in four regions that were halted under an injunction that was modified March 28.

After applying to five of the state’s 14 designated regions for licensure, the U.S. Second Circuit Court of Appeals adjusted the injunction Tuesday so that it bars the issuance of conditional adult-use retail dispensary (CAURD) licenses only in the Finger Lakes region, according to the clerk of court.

The Finger Lakes region is eligible to receive up to nine of the 150 CAURD licenses the New York Office of Cannabis Management (OCM) announced in August.

With Tuesday’s modified injunction, OCM regulators can now move forward with issuing 19 CAURD licenses in its Brooklyn region, 17 licenses in Mid-Hudson, 11 in Western New York, and seven in Central New York.

Gov. Kathy Hochul, who has been a vocal supporter of the state’s Seeding Opportunity Initiative—to promote social equity in the adult-use cannabis program—said in a March 28 statement she was pleased with the federal appellate court’s modification.

“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,” she said. “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.”

The injunction stems from a lawsuit filed in September 2022 by Variscite NY One Inc., which applied for a CAURD license. However, because the Michigan-based company “is [51 percent] owned by an individual who has a cannabis conviction under Michigan law” and “has no significant connection to New York,” Variscite was deemed ineligible to be selected under New York’s CAURD program, according to the litigation.

RELATED: New York’s Cannabis Licenses Latest Target of Commerce Clause

Variscite’s suit argues that New York’s approach to prioritize local farmers and entrepreneurs in its licensing process for adult-use cannabis violate the U.S. Constitution’s dormant Commerce Clause by discriminating against out-of-state cannabis operators. 

In November, U.S. District Court Judge Gary Sharpe issued a preliminary injunction that included the five regions as a result of the lawsuit. And on Jan. 31, Sharpe denied an OCM motion to reconsider the licensing freeze as well as a motion to dismiss the lawsuit altogether.

Now, with the March 28 decision from the appellate court, only nine of 63 CAURD licenses under the original injunction remained tied up.

“This decision will allow New York’s social equity entrepreneurs to open safe, regulated cannabis dispensaries,” Hochul said.

Since New York commenced adult-use cannabis sales in late December 2022, five dispensaries have opened their doors to the public. The state’s first women-owned adult-use dispensary, Good Grades, will be the sixth when it opens at 2 p.m. March 30.