Alert: Federal Court Issues Preliminary Injunction Halting New York Cannabis Licensure

The preliminary injunction is the byproduct of a lawsuit by Variscite NY One, Inc. challenging the CAURD application eligibility requirements, which require that applying entities’ business principals have a significant connection to New York and be at least (51%) fifty-one percent owned by an individual with a New York State marijuana conviction.

 

Prince Lobel sent this alert out yesterday

On November 10, 2022, the United States District Court for the Northern District of New York enjoined the State of New York from issuing Conditional Adult-Use Retail Dispensary (CAURD) licenses in five of the fourteen geographic regions that New York’s Office of Cannabis Management (OCM) designated for siting them. The affected regions include Brooklyn, Mid-Hudson, Finger Lakes, Central New York, and Mid-Hudson.

The preliminary injunction is the byproduct of a lawsuit by Variscite NY One, Inc. challenging the CAURD application eligibility requirements, which require that applying entities’ business principals have a significant connection to New York and be at least (51%) fifty-one percent owned by an individual with a New York State marijuana conviction.

SEE PACER: https://www.pacermonitor.com/public/case/46247862/Variscite_NY_One,_Inc_v_State_of_New_York_et_al

Variscite, which is fifty-one percent owned by an individual with a marijuana conviction under Michigan law and whose principal has no significant connection to New York, has challenged the constitutionality of these CAURD eligibility requirements as a violation of the Dormant Commerce Clause, which prohibits states from discriminating against interstate commerce.

The Northern District of New York agreed with Variscite and found that “the aforementioned application requirements, especially when considered in the aggregate, will have a discriminatory effect on out-of-state residents seeking a CAURD license.”

The Court held that Variscite is likely to succeed on the merits of its claim and that absent an injunction Variscite would “be excluded from the New York storefront retail cannabis market,” resulting in irreparable injury.

Although New York represented to the Court that it would begin issuing CAURD licenses as early as November 21, 2022, and while the preliminary injunction only applies to the five geographic regions that Variscite selected on its application, it is unclear whether New York regulators still plan to issue CAURD licenses to applicants in the nine geographic regions not impacted by the injunction while the lawsuit is pending. These regions include Manhattan, Queens, the Bronx, Staten Island, Long Island, Mohawk Valley, North Country, and Southern Tier.

If you have any questions about how this injunction may affect your CAURD application or any other cannabis issue, please contact a member of the Prince Lobel Cannabis Team.

 

With thanks to Dalton Battin for his work on this alert.

Primary Sponsor

Top Marijuana Blog