Judge halts marijuana dispensary licenses to parts of New York State

A federal judge has temporarily blocked New York from issuing recreational marijuana dispensary licenses in Brooklyn and parts of upstate New York. At the same time, a legal challenge to the state’s selection process is being considered. This is creating havoc and financial turmoil for the newly licensed cultivators who have been growing in anticipation of the new dispensary openings.

ALBANY, N.Y. —?A federal judge has temporarily blocked New York from issuing recreational?marijuana?dispensary licenses in Brooklyn and parts of upstate New York while a legal challenge to the state’s selection process is being considered.

The preliminary injunction from U.S. District Court Judge Gary Sharpe in Albany on Thursday comes as the state prepares to begin adult marijuana sales by the end of the year, starting with shop owners with past pot convictions or their relatives. New York lawmakers designed the state’s legal market to make sure the first retailers were people directly affected drug law enforcement.

Sharpe is hearing a legal challenge from Variscite NY One, which claims the state’s selection process favors New York residents over out-of-state residents in violation of constitutional interstate commerce protections.

The judge’s order temporarily bars the state from issuing retail licenses for the five regions of the state Variscite selected in its business application: Brooklyn, central New York, the Finger Lakes, the mid-Hudson region and western New York. It does not cover nine other state regions, including the rest of New York City. The ruling affects up to 63 of the 150 possible business licenses.

Officials at the Office of Cannabis Management said Friday its board will still consider license applications later this month for up to 150 businesses and individuals, along with applications for up to 25 nonprofit licenses.

The office remains committed to “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,” spokesman Freeman Klopott said in an email.

Applicants in the initial round had to demonstrate “a significant presence in New York state.” While Variscite’s majority stakeholder has a cannabis conviction, it was under Michigan law. And though the corporation is organized under New York law, its business principal does not meet the significant presence requirement, according to court papers. The business principal filed suit when the Office of Cannabis Management issued guidelines that made it restrictive for multi-state operators. Proponents said that the guidelines were made in the spirit of those most affected by over-policing during the war on drugs that negatively impacted people of color.

In ruling for the company, Sharpe wrote that the state’s license application requirements “will have a discriminatory effect on out-of-state residents.”

If you need advisory services for the NYS CAURD application process, contact?Victor Jung.