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A judge may soon lift a court injunction that’s prevented hundreds of New York cannabis dispensaries for nearly four months, after the state’s Cannabis Control Board voted to settle a lawsuit.
In a Monday afternoon meeting, board members unanimously approved a settlement agreement with plaintiffs, which would lift the injunction. Details of the agreement will remain confidential to the public until attorneys file it in court, but all board members have seen it, according to Office of Cannabis Management General Counsel Linda Baldwin.
“Nothing can happen until the court approves these agreements, and then once that happens the injunction that has been in place will be lifted,” Baldwin said. “This is the next – but a very important – part of the process.”
If a New York State Supreme Court judge approves the settlement, more than 400 CAURD licensees currently barred from opening their stores could move forward, and the OCM could resume issuing new CAURD licenses.
On Aug. 8, New York State Supreme Court Judge Kevin Bryant issued an injunction that has barred state regulators from issuing new Conditional Adult-Use Retail Dispensary licenses, or allowing most licensees from opening their stores.
The enjoinment 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 Office of Cannabis Management in a separate case.
Plaintiffs allege that the OCM and CCB 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.
A few days after issuing the injunction, Bryant 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.
However, the Ulster County-based judge soon after said he wouldn’t exempt a slate of CAURD licensees that the OCM claimed met requirements for exemption. Bryant agreed with plaintiffs that there were discrepancies in the list of 30 businesses the OCM had assured the court qualified for exemption.
Bryant decided the court would accept case-by-case requests for exemption, on which he’d rule individually. Since then, the judge has exempted some CAURDs, including Elevate ADK in Saranac Lake, Air City Cannabis in Rome (delivery only), Terp Bros in Astoria, Queens, Gotham Buds in Harlem, and CONBUD in New York City’s Lower East Side.
This isn’t the first lawsuit to wreak havoc on the OCM’s troubled CAURD program.
Variscite NY One, Inc., filed suit in September of 2022, after the state – according to the complaint – found it was ineligible for a CAURD license because the company is 51% owned by Kenneth Gay, an individual who has no significant connection to New York and who has a cannabis conviction in Michigan. An individual named Jeffrey Jensen owns the other 49%.
That lawsuit resulted in an injunction preventing New York from issuing CAURD licenses in five of the 14 regions in which the agency is licensing these dispensaries. In March, Sharpe narrowed the injunction to only apply to the Finger Lakes region.
The state reached a settlement with Variscite in late-May, in which the OCM agreed to grant a cannabis retail license to the company.
Based on the state’s agreement to license Variscite as part of the settlement in that case, Jayson Tantalo, co-founder of the New York Cannabis Retail Association, is nervous the settlement in the recent case could include licenses for the plaintiffs.
“I’m hoping that they weren’t given licenses, to be honest,” Tantalo said. “If that’s the case it’s only giving more ammunition for other people to come in [and sue] to get a guaranteed license.”
Tantalo said a settlement that lifts the injunction is definitely a positive development, but added that it’s possible the court process could drag on into January.
“As long as the program opens up and we can move forward, I’m going to be happy,” Tantalo said. But “no, i’m not optimistic that an official decision will be made before January.”