Settlement Allows New York Regulators to Issue Dispensary Licenses in Area Previously Blocked by Injunction

New York’s Cannabis Control Board (CCB) voted at its May 30 meeting to settle a lawsuit and remove an injunction that has prohibited regulators from issuing adult-use cannabis dispensary licenses in the Finger Lakes region of the state.

The injunction stems from litigation filed in September 2022 by Michigan-based Variscite NY One Inc., which applied for a Conditional Adult-Use Retail Dispensary (CAURD) license but was denied because the company “has no significant connection to New York,” according to the lawsuit.

Variscite argued that New York’s approach to prioritizing local applicants in its adult-use cannabis licensing process discriminates against out-of-state business owners and thus violates the U.S. Constitution’s dormant Commerce Clause.

RELATED: New York’s Cannabis Licenses Latest Target of Commerce Clause

A judge issued a preliminary injunction in the case in November 2022 that blocked the state from issuing adult-use retail licenses in five regions of the state. In March, the U.S. Second Circuit Court of Appeals adjusted the injunction to only bar the issuance of dispensary licenses in the Finger Lakes region, which was initially eligible to receive up to nine retail permits.

Linda Baldwin, general counsel for the New York Office of Cannabis Management (OCM), told the CCB Tuesday that Variscite had agreed to settle the case, according to the Associated Press. Baldwin said the agreement would allow the licenses that had previously been blocked to be issued and would provide the plaintiff with a license in the future.

The CCB approved the resolution to proceed with settling the lawsuit, AP reported. Baldwin expects the case to be settled in court later this week.

New York’s adult-use cannabis industry has been slow to roll out; Housing Works Cannabis Co. launched the state’s first adult-use sales in December and since then, 12 total dispensaries have opened to the public.

State officials announced in March that they will double the number of CAURD licenses issued during the first licensing round; while the CCB initially planned to award up to 175 total licenses to as many as 150 individuals and 25 nonprofit organizations, regulators will now issue up to 300 total licenses.

In another effort to get more adult-use cannabis retailers open to the public, the OCM proposed revised adult-use regulations earlier this month that would allow the state’s existing 10 medical cannabis operators to expand up to three retail locations to adult-use sales on Dec. 29, 2023—two years earlier than originally proposed.

RELATED:  New York’s Medical Cannabis Operators Could Switch to Adult Use by Year’s End

Another proposal announced this month would allow licensed cannabis businesses to host farmers market-type events this summer, a move aimed at getting the state’s steadily growing supply of cannabis into the hands of consumers.

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