In March, the New York State Office of Cannabis Management (OCM) announced the expansion of the conditional adult-use retail dispensaries (CAURD) program, doubling the anticipated 150 business licenses for dispensaries in New York to 300.
This is welcome news for many who either missed the original deadline to file for a CAURD license or were part of the original 900+ applications received by the OCM, as this gives them another chance to enter into one of New York’s most anticipated industries. As of early April, the OCM has licensed 215 retailers in New York State. While ongoing legislation continues to slow down New York regulators’ ability to award these licenses, dispensaries that have already opened have seen excellent business.
While the expected increase in competition begets more innovation and a better atmosphere for the consumer, what will the increase in licenses mean for business owners or those looking to enter one of the fastest-growing industries in New York? How will ongoing litigation impact New York’s roll-out of CAURD licenses?
What Does This Mean for CAURD Applicants?
Despite the 900+ original applications that the OCM is processing, license applications will continue to be sent to the Cannabis Control Board for consideration on a rolling basis. This is great news, as many who were looking to pioneer the cannabis market in New York missed the original deadline to file or were dissuaded from originally applying with the previously established limit of 150 licenses being granted.
That being said, it does appear that outside of select non-profits, eligible applicants must continue to be “justice-involved.” While outlined in more nuance on the OCM website, what this means, in short, is that only individuals who either have a history of cannabis convictions or have family members with such convictions remain eligible candidates for a license.
This continued “first dibs” for New Yorkers with cannabis-related convictions has sparked more ire from those without a history of cannabis convictions, as according to the Associated Press, a lawsuit has been filed in Albany County on March 16, 2023, claiming that New York State cannabis regulators exceeded their legal authority when they opened the initial application pool last year, only offering first dibs to New Yorkers with cannabis-related convictions instead of all New Yorkers.
Continued Cannabis Controversies
As previously hinted at, the Coalition for Access to Regulated & Safe Cannabis, a trade organization that represents authorized medicinal marijuana suppliers, sued State cannabis regulators in an effort to try and open up the previously mentioned licensing requirements to all retail applicants.
The case, filed in state court in Albany, contends that state cannabis officials overstepped their legal power by opening the initial applicant pool in August only to persons with prior marijuana convictions or their family, rather than to everyone. The Cannabis Control Board and Office of Cannabis Management of the state, as well as prominent executives, are named as defendants in the complaint.
This isn’t the first time the State’s cannabis licensing procedure has been challenged in court. In the Variscite case, a judge temporarily barred New York from issuing marijuana dispensary licenses in Brooklyn and parts of upstate New York in November 2022. NY One alleged that the state unfairly advantages residents who live in the state over those who do not.
Now that the pending Variscite case has been resolved outside of Court, there has been renewed hope for those that missed out during the initial justice-involved application window may have an opportunity to now obtain a retail cannabis license as those that have been awarded licenses and have opened up shop have seen excellent business. Since those denied or unable to apply risk missing out on access to state loans and seemingly unfettered access to the blooming New York State cannabis market, the outcomes of these suits could invite further litigation, further slowing the ramp-up of New York’s cannabis industry.
Considering that in the Variscite case, a court order was handed down to bar the further issuance of CAURD licenses in multiple counties across the State, we may see something similar happen in the Albany area as this lawsuit continues to develop to protect the State from further litigation from rejected applicants.
What’s in Store for the Future of New York’s Cannabis Industry
Despite the recent litigation, New York still seems set on pushing the expansion/roll-out of cannabis licenses across the State to develop this industry. It is anticipated that recreational cannabis sales will generate over $4 billion over the next five years. Some even consider this estimate to be a bit conservative, as many unauthorized cannabis stores/trucks have begun popping up around the State to try and get a piece of the action. Whether civil injunctions will be placed against all unauthorized cannabis stores is unknown, but those interested in getting into the business of cannabis should keep their eyes focused on these two lawsuits as they could dramatically impact New York’s cannabis industry roll-out.
Ryan McCall is an associate in Tully Rinckey PLLC’s Albany office, where he heads the firm’s cannabis practice group. He has assisted many local and statewide media outlets with commentary about ongoing laws and regulations that the New York State Office of Cannabis continues to release. Ryan can be reached at (888)-529-4543 or at info@tullylegal.com.
