Judge Orders a Pause on New NY Cannabis Retail Licenses

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A New York Supreme Court judge is halting the state from issuing new cannabis retail licenses until a lawsuit over who regulators allow to open up dispensaries is decided upon.

Judge Kevin Bryant ordered on Monday that the state’s Office of Cannabis Management (OCM) and the Cannabis Control Board (CCB) hold off on authorizing new weed shops until it becomes clear whether the agencies violated state law by prioritizing applicants who were previously incarcerated for marijuana-related offenses over military veterans.

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The Marijuana Regulation and Taxation Act (MRTA), which legalized the sale of recreational weed in the state, prioritized both groups equally to get some of New York’s first licenses. However, the lawsuit argues that service-disabled veterans have only been able to secure a license if they partnered with a person with a marijuana-related conviction, the New York Post first reported

The restraining order could be lifted as soon as Friday when the next hearing is set, according to court documents.

“The Office of Cannabis Management (OCM) is aware of the Court’s Order and is adhering to its requirements,” the agency said in a statement. “We are actively communicating with [Conditional Adult-Use Retail Dispensary] applicants and provisionally approved licensees to inform them of the impact of the Court’s order on OCM operations.”

The state’s rollout of the legal cannabis program has been ongoing for a crow’s age, and a pause in issuing licenses could add to the delay.

Disgraced Gov. Andrew Cuomo signed the MRTA into law in March 2021 for the economic benefits and tax revenue that would be collected,  as the COVID-19 pandemic still weighed heavily on commercial growth. 

Cuomo was explicit in the intention of providing “justice for long-marginalized communities.”

After Cuomo dragged his feet on rolling out legal sales, Gov. Kathy Hochul moved to speed it up, and the first recreational dispensary opened in December 2022. However, only 99 permits were awarded to applicants across New York in the third round of approvals in April, bringing the total to 165, Commercial Observer reported at the time. Part of the issue was because of similar court orders in places like Brooklyn.

Long wait times for licenses have resulted in many unlicensed smoke shops selling cannabis. Authorities cracked down by  issuing fines of up to $10,000 per day if weed sales continue at a specific location after a violation, and providing official signage to legal sellers

There could even be a fine in the future for landlords renting brick-and-mortar space to illegal weed sellers, but while the New York City Council approved that bill, it was returned unsigned by Mayor Eric Adams.

The glacial pace of granting legal licenses has been blamed by some forNew York’s shortcomings in tax revenue, with the state on pace to collect only half the tax revenue from weed sales that states like California made in their first year.

Mark Hallum can be reached at mhallum@commercialobserver.com.