On Tuesday, the Court of Appeals for the Second Circuit in Manhattan lifted part of an injunction that had been preventing regulators from issuing licenses for recreational cannabis dispensaries in some parts of New York. This decision partially reverses a hold put in place by a lower court judge hearing a challenge to the state’s licensing requirements. This is good news for the state’s rollout, as it removes a major obstacle to the issuance of new licenses.
The decision allows regulators to issue 108 dispensary licenses in Central New York, Western New York, Mid-Hudson, and Brooklyn, as these regions are no longer under the injunction. However, 18 licenses in the Finger Lakes region remain tied up in the lawsuit.
This means that new licenses could be approved as soon as April 3, when the Cannabis Control Board holds its monthly meeting. According to the Office of Cannabis Management, at least 18 licenses in the affected regions have been ready for approval since November 2022.
New York Governor Kathy Hochul expressed her pleasure with the decision, saying that “For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products.”
This is great news for farmers and manufacturers who have been sitting on a mountain of inventory, as it paves the way for dispensaries to open in some of the state’s most populous areas, including Buffalo, Syracuse, and the Hudson Valley.
However, it is important to note that getting from licensing to opening is a process that can take several months. Since November, regulators have issued dispensary licenses to 56 businesses and 10 nonprofit groups, but only five stores have opened so far. This is due to the lengthy process involved in setting up a dispensary.
The injunction had been imposed in a case brought by a cannabis company called Variscite NY One, which argued that New York’s eligibility criteria violated the U.S. Constitution’s dormant commerce clause. The circuit court had rejected the state’s argument, but the appeals court has now lifted the injunction.
The effort to issue licenses was designed to give priority to people in communities that were heavily targeted during the war on drugs. Applicants for the dispensary licenses are required to have strong ties to New York, such as a primary residence or bank accounts, and to have been affected by a state-level conviction for a cannabis-related offense, among other criteria.
While this decision is great news for most of the state, Rochester is still under injunction. This has been seen as bittersweet news by State Senator Jeremy Cooney, a co-chairman of the Marijuana Task Force for the Black, Puerto Rican, Hispanic and Asian Legislative Caucus.
A separate lawsuit was filed against the state on March 16 by a coalition led by medical cannabis companies, arguing that regulators overstepped their authority in the restrictions they placed on licenses. The parties are due in court on April 28.
However, the chief of staff and senior policy director in the Office of Cannabis Management, Axel Bernabe, said in an interview with Green Market Report that the agency hoped that applications for people who didn’t qualify for the more restrictive CAURD license could be opened after Labor Day. This could make recreational dispensary licenses available to everyone.
