A ruling by a state judge in Albany could set back thousands of cannabis entrepreneurs who are either vying for a business license in New York or who already received one and are trying to set up a dispensary.
State Supreme Court Justice Sharon Graff preliminarily blocked the state Office of Cannabis Management from processing any applications from people who had not already secured a location for their business and notified the proper municipality before November 2023.
The judge said in a ruling on Thursday that the office violated the provisions of the state cannabis law by waiving a requirement that businesses identify a location and notify the relevant municipality prior to submitting their applications.
Taylor Randi Lee, a spokesperson for the Office of Cannabis Management, said the agency doesn’t comment on pending litigation.
Graff’s ruling is the latest in a series of lawsuits that have threatened to derail New York’s cannabis licensing efforts as the state seeks to stand up its legal industry.
State cannabis officials opened an application window last November for cannabis hopefuls who had already secured a location — but they also opened a second window the following month for those who had not. Officials have been working through the applications that were submitted in those pools, though they have more than 3,000 left to go.
The lawsuit was brought by four cannabis businesses that secured real estate before applying for licenses but are still waiting to find out if they will be approved. If they’re successful, the suit could thin out potential competition.
The state’s actions have unfairly “put people who followed the law and got a location at a disadvantage to those people who don’t have any of those costs,” said Thomas Spanos, a lawyer representing the petitioners.
As part of their efforts to promote social equity in the cannabis industry, state officials early on in the licensing process gave priority to people who had prior cannabis convictions, as well as their family members, without requiring them to have a location in hand. While the state was initially supposed to secure and build out real estate for these applicants, the process proved slow and costly. The state eventually allowed people to find their own storefronts.
More than 400 New Yorkers were licensed through that initiative, known as the Conditional Adult Use Retail Dispensary, or CAURD, program. Some now have stores up and running, but many have yet to open. Now, those ventures could be at risk.
Many of those hoping to enter the legal industry wouldn’t be able to apply if they had to pay to hold onto a location for months while waiting for their licenses to be processed, said Osbert Orduña, CEO of The Cannabis Place in Queens, which was licensed through the CAURD program.
He added that he faults state officials for not better managing the rollout. “ It’s a major black eye to the Hochul administration,” he said.
The preliminary injunction issued on Thursday will remain in effect while the lawsuit plays out in court.