Medical Marijuana Giants Sue New York Cannabis Regulators
by Douglas Suraci·
On March 16, 2023, a coalition of large, multi-state medical marijuana companies, including Acreage Holdings, PharmaCann, Green Thumb Industries, and CuraLeaf, along with two hopeful dispensary owners and a medical cannabis practitioner filed a lawsuit in the Albany County Supreme Court against the New York State Office of Cannabis Management (OCM) and Cannabis Control Board (CCB). This lawsuit, yet another roadblock in the full rollout of the state’s recreational marijuana market, alleges “unconstitutional overreach and policymaking, egregious abdication of duties, and actions that put New Yorkers’ health and safety at risk."
The coalition’s complaint focuses largely around the initial 2021 Marijuana Regulation and Taxation Act (MRTA) and the OCM and CCB’s alleged failure to fulfill the requirements outlined within the act—specifically the requirement to provide all applicants equal access to retail dispensary licenses. According to the suit, the “CCB and OCM have improperly assumed the role of the Legislature to impose their own policies over those of New York’s elected officials and, by extension, their constituents,” and have violated the separation of powers doctrine by creating a specific selection pool for applicants via the CAURD licensing program that grew out of Gov. Kathy Hochul’s Seeding Opportunity Initiative announced last March. This initiative seeks to position individuals with prior cannabis-related criminal offenses to make the first recreational sales in the state by providing the initial dispensary licenses to individuals impacted by the criminalization of marijuana and related non-profits.
This selection pool developed by the OCM and CCB is intended to promote social equity and New York small businesses by prioritizing initial dispensary licenses for New York State residents negatively affected by the War on Drugs and limiting the reach of multi-state operators from entering the New York State market before local businesses can develop as an aim to give New Yorkers a chance for success in such a quickly growing industry. OCM’s executive director Chris Alexander stated on the Open Society Foundation’s progress report live stream that, “We are not anti-Big Cannabis. The [industry] has been dominated by 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.”
The coalition further expresses a concern that the OCM and CCB’s delayed implementation of regulations and restrictive dispensary licensing process have enabled the growing black market to prosper putting New Yorkers’ health and safety at risk. Currently, over 1,400 unlicensed businesses are operating throughout the state despite regulators initial attempts to shut them down by sending cease and desist letters and law enforcement operations. These unlicensed operators could create a loss of around $2.6 billion in tax revenue over the next seven years and are selling unregulated goods that do not go through the stringent safety and health testing required by the government. The lawsuit seeks to push regulators to pursue civil injunctions against all unlicensed cannabis stores and immediately open the dispensary licensing window for all applicants to combat this.
As it currently stands, CAURD has granted 66 licenses with five legal dispensaries now open and operating in the state. Even outside of the lawsuit, there are concerns that this will not meet the demand of consumers, and as a result, the OCM and CCB have announced plans to increase the amount of CAURD licenses to 300.