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In the latest blow to New York’s nascent legal cannabis industry, an Ulster County judge said he will not exempt any Conditional Adult-Use Retail Dispensary licensees from an injunction he issued on Aug. 18 because the Office of Cannabis Management failed to comply with a court order.
“It is clear to this Court upon review of the affidavits that OCM failed to comply with this Court’s Order regarding exemptions to the injunction,” Judge Kevin Bryant wrote in a decision filed Monday.
The decision came as part of a lawsuit brought against the state by four service-disabled veterans who intend to apply for dispensary licenses. The veterans were later joined by 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.
Plaintiffs allege that the OCM and Cannabis Control Board violated the Marijuana Regulation and Taxation Act by opening up retail dispensary license applications for a select group of people – “justice-involved individuals” who own a profitable “qualifying business” – instead of opening applications up for everyone at the same time.
On Aug. 7, Bryant issued an injunction preventing the OCM from allowing any more CAURD businesses to open.
Bryant later filed an order that said licensees who met all approvals before Aug. 7, 2023, would be allowed to open their stores. The order also said that the court may allow other CAURD dispensaries to open on a case-by-case basis, if state officials request permission from the judge.
The OCM and CCB appealed Bryant’s decision on Aug. 24.
In a hearing at Ulster County Courthouse last Friday, Bryant appeared to exempt at least 23 of 30 CAURD businesses that OCM officials said met the judge’s requirements. Plaintiffs in the case objected to the exemption on Friday, citing discrepancies in the list of 30 businesses:
“The affidavit of Patrick Mckeage [OCM’s First Deputy Director] that Defendants filed this afternoon … raises real questions about whether the thirty CAURD applicants on the List … in fact ‘met all requirements for licensing,’ as required by the Court’s August 18, 2023 order.”
Bryant agreed with the plaintiffs on Monday.
“It is not clear to this Court whether any of the thirty identified licensees have completed all post-selection requirements and inspections and it should be clear that those who have not, should not have been included on the list submitted to the Court as set forth in the prior Order,” Bryant wrote.
He said from now on, the court will accept case-by-case requests for exemption, and will rule on each promptly. The judge also called out attorneys representing the state for the list they presented.
“Under the circumstances, given the conflicting information contained in the affidavits, absent further detailed information from OCM, this Court will not lift the injunction regarding any of the identified licensees,” Bryant said.
The court “directs OCM to submit ‘supporting underlying documentation’ to accompany any further submission regarding exemptions to the injunction.”
The news on Tuesday was a blow to Ryan Martin, whose business was the only Finger Lakes-based CAURD on the list of licensees who should be exempted from the injunction.
Martin said he was cautiously optimistic when the OCM included his business on the exemption list. Tuesday’s decision represented yet another obstacle that will slow down progress at the dispensary he wanted to open next month.
“It’s just really frustrating to try to do the right thing the right way, and just have all these roadblocks,” Martin said, adding that state legislators could have avoided the entire injunction if they’d codified CAURD into law, as they did for conditional cultivation and conditional processing licenses.
Martin also questioned the motives of defendants in the case, especially the medical companies that will likely be able to join New York’s adult-use market later this year.
“Where’s all the money coming from,” Martin asked. “Why is the cannabis industry being held up so long?”
To date, there are 463 CAURD licensees across New York State but only 17 open and operating brick-and-mortar dispensaries.