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The mood outside Ulster County Courthouse shifted from morose humor to pep rally, as more than 50 Conditional Adult-Use Retail Dispensary licensees and supporters coped with a judge’s decision to halt the conditional cannabis retail program for at least two more weeks.
“We might have lost the battle today, but we’re going to win the war,” Jeremy Rivera, CEO of Terp Bros Cannabis dispensary – which was supposed to open next week – said to a crowd of about 60 people after the court proceeding.
Minutes prior, Judge Kevin Bryant had ruled that a temporary injunction he placed on the CAURD program Monday as part of a lawsuit would remain in place until another hearing in two weeks.
While he extended the injunction, Judge Bryant made clear that he understands the harm it may cause CAURD licensees, and implored plaintiffs and defendants to communicate and reach an agreement that satisfies all parties.
“What is clear now is the impact on everyone involved … I don’t want anybody in the state to feel unnecessary pain,” Judge Bryant said “I do believe that there is some space that you can all find together to bring this to a resolution that allows everyone to progress.”
Plaintiffs in the case originally included Carmine Fiore, Steve Mejia, William Norgard and Dominic Spaccio, a group of service-disabled veterans that planned to pursue adult-use dispensary licenses.
However, on Friday, Judge Bryant allowed the Coalition for Access to Regulated & Safe Cannabis – a group representing some of New York’s medical cannabis companies, and is suing the Office of Cannabis Management in a separate case – to join as plaintiffs.
An attorney for the plaintiffs, Brian Burns, argued that the OCM and CCB improperly limited eligibility for the CAURD program – only allowing “justice-involved individuals” who own a profitable “qualifying business” – when they created it last year.
Burns said the OCM superseded the MRTA when it specified only “justice-involved” individuals could receive CAURD licenses. The MRTA specifies six social equity groups eligible for special benefits, Burns said. That list does not include “justice-involved” people, but does include service-disabled veterans.
Burns also noted the text of the MRTA specifically states the initial dispensary licensing application period will open for “all applicants at the same time.” His clients were at risk of being irreparably harmed, he said, because they could lose first-mover advantage in New York’s cannabis market, as well as available real estate.
“The regulatory bodies … violated that expressed statutory requirement, and they’re violating the New York constitutional principle of separation of powers,” Burns said. “MRTA puts [my clients], as service-disabled veterans, in a priority category pertaining to licenses.”
A spokesman for the plaintiffs declined to comment following the hearing.
Representing the New York Attorney General’s Office, attorney Shannan Krasnokutski disputed the plaintiffs’ assertion that OCM essentially overruled state legislators by creating the CAURD program. The legislature approved a state budget, which allocated $50 million to the DASNY investment fund. That money will pay out loans to CAURD businesses for dispensary buildouts.
“Writing it into the budget bill and funding it through DASNY, I think, is pretty clear evidence that they did intend for the program to exist,” Krasnokutski said.
Krasnokutski also said the CAURD program is separate from the general licensing application process, which OCM said will begin in early October. She added that some changes to the CAURD program would require changes to proposed regulations, which would cause a significant delay.
The OCM introduced the proposed regulations last November, Krasnokutski said, and state law only allows agencies one year to propose and approve regulations – if not approved by November, regulators will need to start the process again.
However, Krasnokutski appeared shaky and unprepared at times – she wasn’t able to quantify harm CAURD licensees would incur amid an extended injunction, and initially misstated dispensary buffer zones, among other errors.
Attorney Jorge Vasquez, who joined the lawsuit to represent CAURD licensees affected by the injunction, contended that his clients would suffer more under an injunction than plaintiffs. CAURD licensees he represents are already paying rent on spaces, have spent money building out their stores and have to maintain payroll for employees they’ve hired.
“Everything that the plaintiffs have submitted is purely speculative,” Vasquez said. “We have leases signed, we have places that are built out.”
CAURD licensee Coss Marte, who was planning on opening CONBUD dispensary in Manhattan’s Lower East Side next month, told NY Cannabis Insider he’s invested nearly $1 million in his business.
“It’s just a disaster,” Marte said in an interview. “If we don’t solve this … within three to four months, I could be bankrupt.”
Rivera, CEO of Terp Bros, was planning on opening his store in Astoria on Tuesday. Extending the injunction for two weeks means that’s not going to happen, and Rivera worries that some of the more than 20 workers he hired might leave.
“This two week intermission is so much more harmful than people realize,” Rivera said. “As of right now, the irreparable harm that’s being placed on the CAURD applicants who are ready to open is tremendous.”
Outside the courthouse following the decision, Osbert Orduña, CEO of The Cannabis Place in Queens – which currently delivers weed, and is planning on opening a brick-and-mortar location – decried corporate interests involved in the case.
Orduña, a service-disabled veteran himself, noted that CAURD licensees include many men and women who served – and were injured – in the military. He suggested that medical cannabis Registered Organizations – which are mostly large multi-state operators – stand to gain from the CAURD program’s failure. ROs currently only operate in the state’s medical program, but can begin expanding into the adult-use market in a few months.
“The longer that … social equity programs are delayed and the longer that this is enjoined, it just gives them more time to quickly operationalize once December comes around,” Orduña said.
“Everything stops and halts – the farmers go into bankruptcy, the processors start going into bankruptcy … who’s able to step into that void and benefit immediately?”