New York's adult-use cannabis social equity licensing scheme has hit a major snag. On Mar. 16, an association comprised of the state's largest medical-marijuana operators filed a suit against the NYS Office of Cannabis Management (OCM) and the Cannabis Control Board (CCB) that calls for the end of the Conditional Adult-Use Retail Dispensary (CAURD) program intended for justice-involved individuals who've been convicted of cannabis crimes.
Just five stores have opened so far under CAURD licensing which involves the state securing locations and funding for the new retail businesses. The main contention of the the Coalition for Access to Regulated and Safe Cannabis (CARSC), which includes Acreage Holdings, Curaleaf, Green Thumb Industries and PharmaCann, is that the medical providers have thus far been shut out of the process.
“Regulators have neglected their responsibilities to enforce the MRTA [Marijuana Regulation and Tax Act] as written and instead focused on high-minded policymaking – a role that is reserved for our State’s elected officials," says attorney David Feuerstein on the CARSC's behalf. "For those parties that want a legal and regulated marketplace, the current state of the cannabis market in New York is unacceptable."
The suit argues that the 10 medical licensees “have invested tens of millions of dollars over the past eight years in order to produce a sufficient supply of pharmaceutical-grade cannabis to serve New Yorkers. Arresting their entry into the adult-use market inflicts ongoing injury to their business and imperils their bottom line.”
Chris Alexander: "We want folks to be here, but in New York you have to compete. You can't suck up the entirety of the market."
Both OCM's executive director Chris Alexander and CCB's chair Tremaine Wright are named in the suit. The agencies have yet to respond publicly.
However, Alexander did appear on the Open Society Foundation's progress report live stream the day after the suit was announced. While he wasn't directly asked about the CARSC suit, Alexander stated several times, "We are not anti Big Cannabis."
"We're trying to make space for others," he commented. "The space has been dominated by a few across the country. We want folks to be here, but in New York you have to compete. You can't suck up the entirety of the market. There's going to be big businesses here. I hope the small businesses will become big businesses."
He added: "The storefronts is the thing that has really frustrated me and caused a lot of confusion in New York."
There are more then 1,500 illegal pot shops in the New York City's five boroughs alone. The stores have popped up ever since the legalization legislation passed in 2021.
The CARSC suit comes on the heels of a prior suit filed in November by Michigan-based Variscite NY One, which challenges the OCM's social-equity regs for licensing. A judge ruled OCM cannot issue licenses in five areas of the state: Brooklyn, Central New York, the Finger Lakes, Mid-Hudson and Western New York.
New York cannabis attorney David Holland with Prince Lobel believes the CARSC plaintiffs may be right that CAURD licensing is not spelled out in the law. "They have valid concerns," he tells CelebStoner. "It's a legitimate gripe. The court could decide that the CAURD program defies the intent of the law."
Holland favors CAURD licensing and is wary of the current MSOs (multi-state operators) getting four more stores each for a total of 40, noting: "There's no way to compete with that."
While he thinks Variscite will lose, the CARSC case is another matter. "The courts could side with the plaintiffs," Holland reluctantly acknowledges.