New York’s adult-use cannabis retail market—one that’s been slow to roll out—is now at a standstill under an Aug. 7 court order blocking state regulators from issuing licenses and approving dispensary openings.
State Supreme Court Judge Kevin Bryant issued the injunction Monday in Albany County as part of a lawsuit filed last week by four service-disabled veterans who argue the New York Office of Cannabis Management (OCM) violated state law in its exclusion of licensing opportunities to them and other groups.
New York attorney David B. Feder, founder of Weed Law, posted Bryant’s three-page preliminary injunction and temporary restraining order Monday on LinkedIn.
The Marijuana Regulation and Taxation Act (MRTA), New York’s adult-use legislation that former Gov. Andrew Cuomo signed into law March 31, 2021, states that part of the OCM’s Cannabis Control Board’s duties are to ensure “that the initial adult-use cannabis retail dispensary license application period shall be opened for all applicants at the same time.”
And while the Cannabis Control Board was granted the authority to prioritize the “inclusion of social equity licensees,” the plaintiffs in last week’s court filing—Carmine Fiore, William Norgard, Steve Mejia and Dominic Spaccio—argue that state regulators overstepped their powers by opening the first licensing application window to only those with cannabis-related offenses and their immediate family members. In doing so, they omitted service-disabled veterans and other groups that should qualify as equity operators, according to the plaintiffs.
As part of a “Seeding Opportunity Initiative” introduced by Gov. Kathy Hochul in March 2022 for the adult-use cannabis industry, the OCM originally issued licenses to 150 social equity retailers, referred to in New York as Conditional Adult-Use Retail Dispensaries (CAURD), out of a pool of 903 applications submitted in September 2022. But rather than prioritizing licenses for all social and economic equity applicants, regulators focused on licensing those with cannabis-related convictions and nonprofit organizations that assist or provides services to these individuals.
“Service-disabled veterans are the only social equity group in the law not born into priority status, but a group to which anyone could belong,” Fiore said in a statement from the plaintiffs, Albany-based Times Union reported. Fiore served eight years in the U.S. Army and the New York Army National Guard. “We are also the only priority group in the (law) that achieved its status by helping communities,” he said.
Fiore previously served as the veterans’ committee chairman of the Cannabis Association of New York (CANY), a trade group that represents more than 500 businesses and individuals across the cannabis supply chain, a position he said he was ousted from for being critical of Hochul and the state’s adult-use rollout, the New York Post reported in May.
Fiore’s criticism was based on what he said is the lack of cannabis licenses given to veterans, and now a judge wants to hear his and the other plaintiffs’ case.
Bryant wrote in this week’s court order that “there is genuine urgency and that immediate and irreparable injury, loss, or damage will result unless the defendants … are restrained before a hearing can be had.”
The order prevents New York state regulators from awarding or further processing additional CAURD licenses and/or approving operations for provisional or existing CAURD licenses until, at the very soonest, a scheduled hearing for Aug. 11.
Since the original 150 licenses were awarded in late 2022, OCM reopened the CAURD application window, and the office announced July 19 that its board members approved 212 additional provisional CAURD licenses to bring the total number of such licenses to 463.
“The provisional approval of today’s 212 CAURD licenses by the Cannabis Control Board marks a momentous leap forward in our pursuit of an inclusive and fair cannabis industry,” CCB Chair Tremaine Wright said in the announcement. “These licensees are demonstrative of the innovation and diversity of New York State.”
The board’s recent move to approve more provisional licensees is an effort to fast-track expansion for the state’s licensed retail market as illicit operators continue to dominate in plain sight. The New York City Police Department estimated earlier this year there were 1,300 unlicensed cannabis establishments in the Big Apple alone.
While Hochul’s office and the OCM have recently taken on enforcement actions against these illicit operators following signed legislation in May 2023, a lack of access to licensed dispensaries throughout the state has only compounded the need for these actions. Despite adult-use sales launching Dec. 29, 2022, there are only 17 storefront dispensaries and four delivery services open and operational more than seven months later.
In part, this is because $150 million in private-sector funding that was supposed to help CAURD licensees open turnkey retail facilities in late 2022 wasn’t secured until June 2023. Also, as part of the OCM’s effort to create equal opportunities in the adult-use market, regulations currently ban New York’s existing medical cannabis licensees, who operate 40 retail facilities throughout the state, from entering the adult-use market until at least Dec. 29, 2023.
As a result of these circumstances, New York is lagging behind every other adult-use cannabis market in the nation with an average monthly spend of $0.29 per capita during the first six months of 2023, according to a Cannabis Business Times analysis. Missouri, for example, a state that launched adult-use sales five weeks after New York, has an adult-use market with an average monthly spend of $14.35 per capita in 2023.
Overall, New York’s licensed adult-use retailers sold roughly $33.4 million in cannabis during the first six months of 2023, according to OCM.
Maryland, which just launched adult-use sales on July 1, reported more than $51.2 million in adult-use sales during its first month alone.
