Proposed settlements in two important lawsuits are poised to reshape the landscape of the cannabis industry in New York. The cases involve challenges to the regulatory framework established by the New York State Cannabis Control Board (CCB) and Office of Cannabis Management (OCM) relating to the Conditional Adult Use Dispensary (“CAURD”) program and the ability of Registered Organizations under New York’s Medical Program to participate in the adult-use market. The two cases are Fiore v. New York State Cannabis Control Board (Sup. Ct., Albany Co., Index No. 907282-23) and Coalition for Access to Regulated & Safe Cannabis v. New York State Cannabis Control Board, (Sup. Ct., Albany Co., Index No. 902390-23).
Fiore v. New York State Cannabis Control Board (Index No. 907282-23)
In Fiore, the plaintiffs are disabled veterans, one of the social equity categories in the New York cannabis legislation. Plaintiffs made a constitutional challenge to the CAURD program, and obtained a preliminary injunction enjoining CCB and OCM from further administering the program until its constitutionality could be determined.
The parties in Fiore have agreed to a settlement and have submitted a stipulation of settlement to the Court for approval. There are 4 major takeaways from the settlement agreement (the “Fiore Agreement”), which was formally voted on and approved by the Cannabis Control Board (CCB) on November 27, 2023.
- The CAURD injunction, which has been in effect since August 7, 2023, is to be lifted within 10 business days of the Fiore Agreement being approved by the Court. This development marks a crucial turning point in the legal proceedings and has immediate implications for the CAURD program. If the court approves the proposed settlement, the 436 provisional licensees that have already been awarded their license and have received all necessary approvals from OCM will be allowed to open.1
- OCM will award all 4 plaintiffs in the case one adult-use retail dispensary each. Additionally, the awarded licenses will come with site protection, ensuring the designated locations receive the necessary safeguards under the regulations to open.
- OCM and CCB have committed not to issue any new or additional provisional CAURD licenses until April 1, 2024.
- Lastly, the parties agreed to provide mutual releases of claims related to the arguments made or relief sought in the lawsuit and the settlement constitutes the entire agreement between them related to the lawsuit.
Coalition for Access to Regulated & Safe Cannabis v. New York State Cannabis Control Board (Index No. 902390-23)
In Coalition, the plaintiffs are a group of individuals and entities including many of the Registered Organizations (“ROs”) that have licenses to operate in New York’s Medical Program. 2 The parties in Coalition have also agreed to a settlement agreement, and that agreement has also been submitted to the Court for approval (the “Coalition Agreement”). There are 5 major takeaways from this settlement:
- On December 8, 2023, the Cannabis Control Board (CCB) is required to convene a meeting to consider and potentially approve the applications of the Plaintiff Registered Organizations for transition to adult use Registered Organization with Dispensing (R.O.D.) licenses and/or Registered Organization Non-Dispensing (R.O.N.D.) licenses.
- Provided that they satisfy all technical and deficiency requirements outlined by the OCM, the ROs will be allowed to open their first co-located adult-use dispensaries by December 29, 2023.
- By June 29, 2024, the ROs will be authorized to open their second and third co-located adult-use dispensaries, signaling a significant expansion in their operational footprint.
- The ROs will be extended “site protection” to the three retail locations that each RO intended to co-locate as identified in their applications.
- The OCM has committed to impartiality, explicitly stating that it will not treat any of the RO members of the Coalition plaintiff group differently than any other registered organization seeking to transition to Article 4 licensure on the basis of their involvement in the lawsuit.
Restarting the CAURD program and bringing the ROs into the adult-use industry in New York will have a profound impact the entire cannabis industry in New York. It is crucial for all cannabis licensees and applicants to stay informed and be prepared for the impacts that may follow with the approvals of the respective settlements.
For more information about these recent developments, the proposed settlements and the evolving New York cannabis space, please contact David Holland, James K. Landau, Andrew Schriever, Mike Ross, John Bradley, or any other member of the Prince Lobel Cannabis Team.
With thanks to Alexander Hymowitz for his work on this Client Alert.
[1] https://cannabis.ny.gov/system/files/documents/2023/11/cannabis-control-board-votes-on-settlement-agreement-to-allow-dispensary-openings-to-resume-statewide.pdf
[2] It should be noted that although New York has 11 registered organizations, only 5 ROs joined the plaintiff coalition: 1) Curaleaf NY, LLC; 2) PharmaCann of New York LLC; 3) Fiorello Pharmaceuticals Inc; 4) NYCANNA LLC and 5) Citiva Medical LLC. The settlement only governs these specific ROs.
