New York Regulators Reach Settlement in Lawsuit That Stalled Adult-Use Cannabis Dispensary Licensing

The more than 400 Conditional Adult Use Retail Dispensary (CAURD) licensees whose businesses are stuck in limbo under a court order could soon be free to open up shop as an end appears imminent in a lawsuit filed in August by a group of service-disabled veterans.

New York regulators have reached a settlement with the four plaintiffs, who argue that the Office of Cannabis Management (OCM) violated state law when it excluded them and other groups from cannabis licensing opportunities in New York.

The settlement is still pending finalization, according to a Forbes report, but it is expected to result in the lifting of a temporary injunction that has halted the licensing process since August.

New York Gov. Kathy Hochul unveiled a “Seeding Opportunity Initiative” in March 2022 to prioritize social equity applicants in the adult-use cannabis licensing process. The plan included issuing CAURD licenses to those with past cannabis-related convictions and nonprofit organizations that assist or provide services to those individuals.

The plaintiffs in the lawsuit—Carmine Fiore, William Norgard, Steve Mejia and Dominic Spaccio—argue that state regulators exceeded their authority by opening the first licensing application window to only those with cannabis-related offenses and their immediate family members. This licensing scheme, they claim, omitted service-disabled veterans and other groups that should qualify as social equity licensees.

State Supreme Court Judge Kevin Bryant issued the injunction Aug. 7 in Albany County, blocking state regulators from issuing licenses and approving dispensary openings.

Although the court has since allowed a few exceptions to the injunction and allowed a handful of new dispensaries to open, 435 CAURD licensees are still left in limbo under the court order.

As these businesses await the finalized settlement, New York officials approved revised cannabis regulations in September that not only paved the way for the state’s existing medical cannabis operators to enter the adult-use market, but also opened a new application window for adult-use businesses. The application period opened Oct. 4 and closes Dec. 18, marking the end of the exclusive licensing process for social equity applicants.

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Meanwhile, New York’s sluggish adult-use rollout has allowed unlicensed cannabis retailers to thrive.

The Cannabis Control Board (CCB) approved at its Oct. 17 meeting emergency enforcement regulations that regulators hope will reduce the burden of proof required to determine a business is illegally selling cannabis. The emergency rules will also allow the OCM to fine unlicensed cannabis retailers up to $20,000 per day for violations.