A cannabis trade organization is suing the state arguing that its marijuana regulators have blocked legitimate operators from entering the business, resulting in a flourishing underground market that is putting consumers at risk.
The Coalition for Access to Regulated & Safe Cannabis, a trade association representing cannabis operators, filed suit against the state’s Cannabis Control Board and Office of Cannabis Management in Albany Thursday claiming that they have “overstepped their authority” and “subverted the intent of the Legislature” by not conforming with a 2021 law that opened the door for retailers to sell pot as part of a regulated cannabis market.
The association claims that the CCB and OCM have restricted access to the market though the creation of a special licensing category—called the Conditional Adult Use Retail Dispensary license—that is strictly for “businesses owned by justice-involved New Yorkers” as well as non-profits that have worked with formerly incarcerated individuals, among other criteria.
The coalition argues that retail licenses have only been awarded to applicants who meet that narrowly-defined criteria, resulting in only 66 licenses being issued and only four stores opening across the state. Meanwhile, the lawsuit says, citing media reports, there are more than 1,400 stores selling illicit retail cannabis in New York City alone.
The association said the Marihuana Regulation and Taxation Act, the statute that legalized cannabis for adult-use, did not include the CUARD category, which was created by the CCB and OCM.
“For those parties that want a legal and regulated marketplace, the current state of the cannabis market in New York is unacceptable,” said David Feuerstein, counsel to the CARSC coalition. “Regulators have neglected their responsibilities to enforce the MRTA as written and instead focused on high-minded policymaking – a role that is reserved for our State’s elected officials.”
The legislation did expressly require regulators to focus on equity in awarding the licenses.
The Act called on the CCB and OCM to create and implement a social justice and equity plan that would ensure 50% of the licenses be awarded to a wide group of underrepresented applicants– including minority and woman-owned businesses; individuals from communities disproportionally impacted by drug enforcement; distressed farmers; and service-disabled veterans. Many of these people do not meet the CUARD criteria.
Furthermore, the lawsuit argues that the CCB and OCM are required to open the licensing process for all applicants at the same time, whether they are part of the 50% or not.
The plaintiffs claim that the purpose of processing all the applicants at once is to make sure there are enough retail outlets selling cannabis, which would undermine the underground market and bring in revenue for the state. Furthermore, with regulated retail outlets, customers would be protected from bad products, they say.
The plaintiffs are calling on the court to declare that the CCM’s CUARD category unconstitutional; to open up the adult use retail dispensary license window for all immediately; and compel the OCM to pursue civic injunctions against all illicit cannabis stores.
The OCM did not respond to a request for comment.