By: Jon Purow, Esq.
On August 2, 2023, four service-disabled veterans brought a lawsuit to the New York State Supreme Court, challenging the conditional adult-use retail dispensary (“CAURD”) program in its entirety. The lawsuit alleges that the Marihuana Regulation and Taxation Act (“MRTA”), which legalized adult-use cannabis in New York, prioritized awarding licenses to certain classes of individuals, including service-disabled veterans such as the plaintiffs. Moreover, the MRTA specifically states that the application period for all applicants for retail dispensaries has to be opened “at the same time.” Consequently, the plaintiffs claim that New York regulators harmed them by unilaterally creating the CAURD program, which prioritized awarding licenses solely to “justice-involved individuals” (not a group expressly articulated in the MRTA) possessing a marijuana conviction and ownership percentage in a profitable business. [1]
Indeed, to date (which is approximately two years into New York’s adult-use program) the only state-legal dispensaries that have opened in New York are CAURDs. The veteran plaintiffs further assert that regulators caused them additional harm by repeatedly increasing the number of CAURD licenses awarded in a competitive and densely packed state, from 150 to now over 450. This type of head start demonstrably gives CAURDS a market advantage to the detriment of the other adult-use retail licensees. Notably, despite rumblings of an October application release date, New York has yet to formally announce, let alone roll out, an application process for non-CAURD retail licenses.
Yesterday, Judge Kevin Bryant of Albany County Supreme Court granted a temporary restraining order (“TRO”) to the plaintiffs that effectively freezes the CAURD program. The TRO forbids New York regulators from processing any more CAURD licenses “and/or conferring operational approval upon any more provisional or existing CAURD licensees.” However, the TRO is effectively a placeholder, as it remains in effect until both parties submit their papers and a hearing is held, which is currently scheduled for Friday, August 11. After that point, the judge will issue a decision as to whether a preliminary injunction should be issued. If it is denied, then that would presumably enable the CAURD program to continue functioning. Injunctive relief is a significant but preliminary step in the litigation, but it, by itself, does not determine the legality of the CAURD program.
This is a significant development in an adult-use program that is already fraught with issues. We are following all New York litigation closely and are prepared to assist our clients in navigating the license and regulatory complexities of New York. Be sure to continue to follow our blog for updates and please reach out to the author Jon Purow at jon.purow@gmlaw.com to discuss opportunities in New York.
[1] This line of attack echoed an argument from a similar lawsuit challenging the CAURD program, which was filed by the Coalition for Access to Regulated and Safe Cannabis (“CARSC”), a group consisting in part of the companies that own the vertical medical cannabis licenses in New York.
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