Settlement OK’D in cannabis case
Board’s decision removes snag blocking retail licenses in five regions
ALBANY — The state Cannabis Control Board on Tuesday voted to authorize a settlement in a federal lawsuit that had temporarily barred regulators from issuing marijuana retail licenses in five regions across the state.
The injunction was issued in November in litigation challenging the state’s decision that a company was ineligible for a retail license because one of its owners — a Michigan resident — lacked “a significant New York state presence.” The injunction came at a critical time during the roll out of New York’s marijuana marketplace, exacerbating other delays and setbacks that have plagued the program.
In March, a federal appeals court overturned part of the injunction, allowing licensing to reopen in four of the regions but keeping it on hold in the Finger Lakes area, which the company that filed the lawsuit had listed as its first choice for a location to open a shop.
The settlement is expected to be filed in U.S. District Court in Albany this week. There is no monetary payment but the state agreed that it would issue the company, Variscite NY One, an adult-use retail license once those are being awarded. The state has only issued conditional retail licenses to date and has steered those to individuals with prior marijuana convictions.
Attorneys for Variscite NY One had argued the conditional licensing program prioritizing applicants with New York marijuana convictions violated the Commerce Clause of the U.S. Constitution. A federal judge had ruled that Variscite could face irreparable harm without an injunction halting the licensing process, “even if it could join the cannabis market at a later date.”
State Sen. Jeremy Cooney, a Rochester Democrat, praised the settlement that will restart conditional licensing in the Finger Lakes region.
“Hopefully, we can put this roadblock for the Finger Lakes Region behind us and focus on creating safe and legal access to recreational cannabis for adults in greater Rochester,” he said in a statement. “Public safety cannot be achieved in our state until all New Yorkers — including those of us in the Finger Lakes region — can walk into a legal dispensary and purchase cannabis products that have been tracked and tested.”
The Finger Lakes region has been allocated up to 18 retail cannabis licenses for applicants formerly convicted of marijuana-related offenses.
The state had argued unsuccessfully in the case that the injunction issued by U.S. District Senior Judge Gary L. Sharpe order would unnecessarily delay the roll out of a tightly timed retail marijuana market that includes a network of small farms whose crops grown last year could be wasted if they are not distributed for sale.
The farmers and others have blamed the injunction for part of the reason they have been unable to sell their crops. But the Times Union reported last week that many farmers who received conditional licenses to cultivate the first crops for New York’s retail marijuana market have also been unable to sell housands of pounds of product they grew last year because of the slow pace setting up a legal retail marketplace.
Last year, more than 200 licensed cultivators grew cannabis in New York, and about 80 of those farms produced “significant” amounts of marijuana — roughly 300,000 pounds. Although the federal injunction had temporarily suspended licensing in five regions, there are 14 marijuana marketplace regions in New York and just 12 stores have opened since marijuana was legalized more than two years ago.
In an effort to curb illegal sales of marijuana the Cannabis Control Board also adopted new regulations Tuesday that are designed to strengthen enforcement efforts against thousands of unlicensed shops — a set up that has further damaged the roll out and taken away customers from the state’s 12 licensed marijuana retailers.
The new rules, which were approved by the Legislature and signed into law by Gov. Kathy Hochul in early May, will empower the Office of Cannabis Management to work with police agencies to seize illegal product, potentially issue fines and also shutter shops that are not in compliance. The law adds language criminalizing the unlawful possession and sale of cannabis and enables regulators to seek fines of up to $20,000 per day for “egregious” violations.