A federal appeals court has lifted part of an injunction that prevented cannabis regulators from issuing licenses for recreational dispensaries in some parts of New York, removing a major obstacle for the state’s rollout.
The decision issued on Tuesday by the Court of Appeals for the Second Circuit in Manhattan partially reverses a hold put in place by a lower court judge hearing a challenge to the state’s licensing requirements. It comes three weeks after the state’s Office of Cannabis Management announced plans to double the total number of available business licenses — known as CAURD, for conditional adult-use recreational dispensary — from 150 to 300.
The court’s decision allows regulators to issue 108 dispensary licenses in the regions that are no longer under the injunction: Central New York, Western New York, Mid-Hudson and Brooklyn. But 18 licenses in the Finger Lakes region remain tied up in the lawsuit.
New licenses could be approved as soon as Monday, April 3, when the Cannabis Control Board holds its monthly meeting. At least 18 licenses in the affected regions have been ready for approval since November, the Office of Cannabis Management said at the time.
Gov. Kathy Hochul said in a statement that she was “pleased” with the court’s decision. “For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products,” she added.
The removal of the injunction paves the way for dispensaries to open in some of the state’s most populous areas, including Buffalo, Syracuse and the Hudson Valley, giving farmers and manufacturers — who have been sitting on a mountain of inventory — more places to sell their weed. But getting from licensing to opening is a process that can take several months.
Since November, regulators have issued dispensary licenses to 56 businesses and 10 nonprofit groups. So far, only five stores have opened, in Manhattan, Ithaca and Binghamton; two more are scheduled to open this week, in Queens and Schenectady.
A circuit court judge had imposed the injunction in a case brought by a cannabis company called Variscite NY One. Its majority owner is a Michigan resident, Kenneth Gay, who said that New York’s eligibility criteria violated the U.S. Constitution’s dormant commerce clause. The doctrine prohibits states from discriminating against interstate commerce to show favor to their own residents.
Applicants for the dispensary licenses are required to have strong ties to New York, such as a primary residence or bank accounts, and to have been affected by a state-level conviction for a cannabis-related offense, among other criteria. The licensing effort was designed to give priority to people in communities that were heavily targeted during the war on drugs. Variscite has since filed a similar lawsuit against Los Angeles, though a judge there declined to block licensing.
The injunction in New York had covered the five regions that Variscite ranked as its top choices for a license. But the state had asked for four of them to be removed because it had received so many applications that it could only consider hopefuls for their first choices, which in Variscite’s case was the Finger Lakes region. The circuit court had rejected the state’s argument.
A lawyer for Variscite, Christian Kernkamp, did not respond to an email on Tuesday seeking comment.
The appeals court in Manhattan plans to hold hearings on the case on an expedited schedule, suggesting that the judges want to resolve the matter quickly. No dates had been set late Tuesday.
Alex Norman, 50, is among 110 people who applied for licenses in Brooklyn. But for months, his application was tied up in the injunction.
After learning that the injunction had been lifted on Tuesday, he said in a text message that he was “trying to contain my excitement.”
State Senator Jeremy Cooney, a Democrat and a co-chairman of the Marijuana Task Force for the Black, Puerto Rican, Hispanic and Asian Legislative Caucus, said the news was bittersweet because his hometown, Rochester, was still under injunction.
“This is great,” he said of the ruling. “But what about Rochester? What about our people? How do we take part?”
A separate lawsuit was filed against the state on March 16 by a coalition led by medical cannabis companies, arguing that regulators overstepped their authority in the restrictions they placed on licenses. The plaintiffs, who include four of the state’s licensed medical marijuana companies, are seeking to make recreational dispensary licenses available to everyone.
Regulators have not responded to the lawsuit. The parties are due in court on April 28.
However, Axel Bernabe, the chief of staff and senior policy director in the Office of Cannabis Management, said in an interview with Green Market Report that the agency hoped that applications for people who didn’t qualify for the more restrictive CAURD license could be opened after Labor Day.
Source: The New York Times
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