New York Cannabis Regulators Sued Again — Here’s the Deal

They say if you can make it in New York, you can make it anywhere – and the cannabis industry is putting that to the test. The much-anticipated recreational market in the Empire State has been met with delays, frustrations, and lawsuits. Here’s what’s going on in the New York cannabis news. 

New York Cannabis News: What’s Going On?

NY passed the MRTA, legalizing recreational cannabis in March 2021. Since then, the program’s rollout has been slow and rife with delays.

Currently, the state is limiting the dispensary licensing process to CAURD licenses, the conditional adult-use recreational dispensary license. The intention of the CAURD licenses was to allow communities that had been disproportionately affected by the war on drugs to get ahead in the market. The idea behind CAURD is noble and just, but the reality is more complicated and has been met with much pushback. 

The first lawsuit against the Office of Cannabis Management and the State of NY was filed in September 2022 by a California-based company, Varascite One. The suit is still ongoing and keeping dispensaries from opening in some regions of the state. 

If that wasn’t enough, there’s a new lawsuit on the block. The second lawsuit was filed in March 2023 by the Coalition for Access to Regulated & Safe Cannabis (CARSC). It alleged NY and the OCM have engaged in “unconstitutional overreach and policymaking, egregious abdication of duties, and actions that put New Yorkers’ health and safety at risk.”

What We Know About The Coalition

Who, or what, is the CARSC group? The group describes itself as an “unincorporated trade association” comprising several existing companies, potential license holders, and medical cannabis practitioners.

The big players in the group are multi-state operators Curaleaf, Acreage Holdings, PharmaCann, and Green Thumb Industries. These companies make up the existing medical cannabis program in NY and are not allowed to apply for a dispensary license under the CAURD program.  

There are also several smaller players in the group, hopeful license holders and a medical practitioner who alleges the state has neglected the medical program in favor of recreational cannabis. 

What the Lawsuits Aims to Accomplish

The desired outcome of the lawsuit is like many things in cannabis: simple in theory and complicated in practice. 

The CARSC group seeks a resolution by a judge declaring the CAURD program unconstitutional, beyond the OCM’s legal authority, and compelling the state to open the adult-use dispensary licenses process immediately. This is no surprise, as most of the organizations in the CARSC group are seeking a dispensary license. 

The suit also seeks to compel the OCM to file civil injunctions against all unauthorized cannabis stores in the state to curb the illicit market and funnel that revenue into legal stores.  

Factors Leading Up to the Lawsuit

As mentioned above, this isn’t the first time NY has been sued over the CAURD program. Variscite One was rejected from the CAURD program because it lacked a “significant presence in NY.” The lawsuit claims this requirement violates the interstate commerce clause. This suit is still pending, and one region of the state (the Finger Lakes) is under a court injunction and cannot open any CAURD dispensaries.

While state officials have repeated their desire to help people affected by the war on drugs get ahead in this recreational market, legal experts have seen these lawsuits coming for months. The state’s residency requirement raised eyebrows and frustrated many larger organizations hoping to cash in on the budding market quickly. 

The second lawsuit hinges on specific language in the MRTA that states, “the initial adult-use cannabis retail dispensary license application period shall be opened for all applicants at the same time.” This has not been the case, as the state has been entirely focused on the CAURD program, which the CARSC group targets.  

No cannabis program in any state is perfect; each has its own challenges, pitfalls, and successes. While the CAURD program has slowed the rollout of the market, people in the legacy market applauded its efforts. But bigger companies have long voiced their frustration; Curaleaf’s CEO Boris Jordan expressed his desire to sue NYS back in January on Twitter.

It’s a frustrating process for all involved for different reasons. The legacy market is frustrated at what they see as corporate cannabis’ attempts to keep them locked out of a market they upheld for decades during prohibition. The multi-state operators are frustrated that they upheld the medical market for years, and are now being told to wait an indefinite amount of time before they can even apply for a recreational license. There is no single right answer, and how these lawsuits unfold will have a profound impact on the future of what could be the largest cannabis market in the US. 

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