The New York State Cannabis Control board is expected to award the first Conditional Adult-Use Retail Dispensary (CAURD) licenses as soon as next week, more than 18 months after adult recreational use of cannabis was legalized in the State. However, last week, U.S. District Court Judge Gary Sharpe granted a temporary restraining order to Variscite, a cannabis company who challenged the CAURD licensing requirements for violating the dormant Commerce Clause. The restraining order applies to the Finger Lakes, Central New York, Western New York, Mid-Hudson, and Brooklyn – five of the fourteen geographical regions included in the cannabis licensing program.
Variscite meets all but one of the requirements for a CAURD license. The company is 51% owned by an individual who has a marijuana conviction under Michigan Law. However, to qualify for a CUARD license in New York, a company must be at least 51% owned by an individual who has a marijuana conviction under New York law. The lawsuit alleges that New York “violated plaintiff’s rights by depriving plaintiff of the opportunity to fairly compete for a license to operate a storefront retail cannabis dispensary.” In his ruling, Judge Sharpe ruled sided with Variscite, citing cases in Maine, Missouri and Michigan where cannabis laws where there have been successful challenges to cannabis laws on similar constitutional grounds.
Freeman Klopott, a spokesperson for the Office of Cannabis management responded saying that the agency does not comment on pending litigation, adding, “the Office of Cannabis Management is committed to the Marijuana Regulation and Taxation Act’s goals of including those impacted by the state’s enforcement of cannabis prohibition in the market that we are building and we are additionally committed to getting New York’s cannabis supply chain fully operational.”