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A court injunction pausing New York’s rollout of its conditional dispensary program has – once again – shaken the state’s legal cannabis industry, but marijuana retail licensees in the Finger Lakes region are feeling particularly disenfranchised.
The vast majority of the 463 Conditional Adult-Use Retail Dispensary licensees will likely not be able to open their doors until after a lawsuit challenging the CAURD program’s legality is adjudicated. However, more than a dozen CAURD businesses in the Finger Lakes only recently received licenses after a separate lawsuit had barred regulators from issuing licenses in that territory.
“It’s a huge setback, and the first setback was huge,” said Scott General, who received his CAURD license in the Finger Lakes in mid-June. “It’s just unreal how we’re being treated – how can this even happen?”
How the Finger Lakes region got the shaft
New York State Supreme Court Judge Kevin Bryant issued an order on Aug. 7, 2023, prohibiting the Cannabis Control Board and the Office of Cannabis Management from issuing new CAURD licenses, and from “processing, approving or investigating pending applications for CAURD.”
Bryant issued the injunction as part of a lawsuit brought against the state by four service-disabled veterans who intend to apply for dispensary licenses. The Coalition for Access to Regulated & Safe Cannabis – a group representing some of New York’s medical cannabis companies that is also suing the OCM in a separate case – has also joined the lawsuit as a plaintiff.
Last week, Bryant filed an order that said licensees who met all approvals before Aug. 7, 2023, will be allowed to open their stores. The order also states that the court may allow other CAURD dispensaries to open on a case-by-case basis, if state officials request permission from the judge.
On Tuesday, lawyers representing the state filed a document listing 30 CAURD licensees that met this standard. Of the 17 CAURD licenses issued so far to businesses based in the Finger Lakes, only one made the list of dispensaries exempt from the injunction.
Several Finger Lakes-based licensees who spoke with NY Cannabis Insider balked at the situation, noting that they had only a fraction of the time other businesses did to meet all approvals before Aug. 7.
“It would actually be hilarious if it wasn’t so ruinous,” said Bob Baldwin, who planned to open a CAURD dispensary with his wife in Canandaigua before the latest injunction came down.
While the latest injunction affects a large majority of CAURD licensees, applicants from the Finger Lakes could not receive licenses until June 15, due to an injunction from a previous lawsuit, which the state settled in May.
In that case, which was filed in September, Michigan-based plaintiff Variscite N.Y. One, LLC, complained that the OCM violated the U.S. Dormant Commerce Clause when it found the company ineligible for a CAURD license. The judge in that case issued an injunction preventing cannabis regulators from issuing CAURD licenses in five regions, but later narrowed it to only include the Finger Lakes – where the plaintiff wanted to open a dispensary.
When the state settled the case in late May, the CCB was able to issue 17 licenses for Finger Lakes-based businesses.
Now, it looks like only one will be able to open.
The only license
Ryan Martin’s business is the only Finger Lakes-based CAURD on the list of licensees who should be exempted from the injunction.
Martin, who received his license on June 15, said he was able to get all his materials in before Aug. 7 because he began engaging local officials in Rochester soon after the MRTA was passed, and found a location in 2021. While CAURD licensing was halted in the Finger Lakes during the Variscite case, Martin completed most of the buildout of his store, and then handed in his approval documents as quickly as possible.
“As soon as we got licensed … we already had a lot of ducks in a row,” Martin said. “We got our license on June 15, and we had that Business Express form filled out within a month and a half.”
While Martin’s business is on the OCM’s exempted list, it’s not yet clear whether Bryant will agree to allow his business – or any of them – to open, Martin said. But if exempted, he’ll likely open his dispensary next month, he said.
But he’s worried for industry colleagues in the Finger Lakes who might not have a shot at opening until the suit against the state is resolved.
“I just feel for all the people who aren’t on this list, who’ve done all this hard work – some people spent their life savings,” Martin said.
That group includes Bob and Kimberly Baldwin, who told NY Cannabis Insider they’ve spent tens of thousands of dollars on lawyer and consultant fees since receiving their CAURD license on July 19. The married couple also owns and operates Finger Lakes Barbecue Company in Canandaigua, and recently hired two managers for that company so the two could focus on the dispensary business.
When the couple spoke with NY Cannabis Insider Wednesday morning, they were unsure whether a capital investor they’ve secured would still be onboard. The injunction also raises questions about whether they can follow through with a letter of intent to buy a space for their shop. Much of the money they’ve already spent is likely irrecoverable, they said.
“There’s no way out of what we already have done,” Bob Baldwin said.
Scott General also began making major financial decisions after the CCB issued him a CAURD license in June. He told NY Cannabis Insider he sold a rental property he owned, and put a lien on his house to pay buildout costs for his store.
Amid the injunction, General’s own position is very much up in the air, but he pointed out that it will also affect Adult-Use Conditional Cultivator businesses. These companies were already struggling to sell product they grew, due to a dearth of operational retailers, and any further lag in the state’s legal weed rollout could decimate many of them, General said.
“There’s millions of dollars of product they’re sitting on, and now you’re telling them there’s no more shops,” General said. “They spent their life savings … they committed so much of their lives to pursue this.”
Kim Baldwin said the injunction could have another negative side effect: out-of-state players replacing locals. Baldwin said she’s already been contacted by a Michigan entity offering a partnership deal which, she said, essentially amounted to buying their license. She declined, but said hundreds of licensees are likely receiving similar offers.
Out-of-state companies trying to move in on licenses the state issued to locals would undercut the entire basis of the CAURD program, and parts of the MRTA, Bob Baldwin said. He also said he feels the OCM and state legislators have largely hung most state cannabis licensees out to dry.
“There’s a lot of impact being felt, and none of it is being felt by the key players who are responsible,” Baldwin said. “The people at the OCM are still getting their six-figure salaries.”