Leafly Lawsuit Challenges Third-Party Marketing Ban In New York

Leafly a well-known online resource and marketplace for all things cannabis. It provides consumers with information about strains, products, and dispensaries, as well as offering a platform for purchasing legal cannabis products.

Recently, Leafly has found itself at the center of a legal battle against New York’s Office of Cannabis Management (OCM) over certain regulations imposed on the state’s cannabis market. This lawsuit is significant for the cannabis industry as it brings to light the challenges faced by businesses in a highly regulated and constantly evolving market. By challenging these regulations, Leafly is advocating for fair treatment and equal opportunities for cannabis businesses in New York.

New York Third-Party Marketing Ban

New York’s recently revealed regulations package allowing anyone to submit an application for a license, still includes a ban on third-party marketing for cannabis retailers. This means that licensed retailers are not allowed to use third-party platforms, such as Leafly, for advertising or promoting their businesses and products.

Additionally, the ban restricts these platforms from displaying product pricing and transmitting orders to retailers in New York. This poses a significant challenge for cannabis businesses as they now have limited options for marketing and promoting their products, which is essential for driving sales and increasing brand awareness. This ban also hinders consumer education and choice, as they are unable to access critical information on strains and prices before making a purchase.

Leafly’s Lawsuit Against New York’s OCM

Leafly’s decision to file a lawsuit against the OCM stems from the ban on third-party marketing and its impact on their business. They argue that this ban is arbitrary, capricious, and violates both the United States and New York constitutions. The company believes that the regulations unfairly target them as they are not prohibited from operating in other states with similar regulations.

They also claim that the ban is a violation of their First Amendment rights to free speech and commercial speech. Leafly alleges that the OCM has exceeded its authority in imposing these restrictions, and it is hurting not just their business but other cannabis businesses as well.

Current Status of the Lawsuit

The court has granted a stay on the third-party marketing ban, which means that it will not be enforced while the case is being litigated. This development comes as a relief to Leafly and other third-party platforms that were affected by the ban. It also allows these businesses to continue operating in New York without facing penalties or fines. In a press release Via Business Wire, by Leafly Holdings Inc, CEO of Leafly, Yoko Miyashita said “We are very pleased with the order, but remain concerned that the Office of Cannabis Management’s stance towards third-party platforms deprives consumers and licensed cannabis retailers with important tools that help them navigate legal cannabis in New York state.”

He also added, “We’ll continue to work toward sensible regulations and are hopeful for a solution that empowers small businesses and supports consumer education and choice, while still protecting the public health, safety, and welfare of the people of New York.”

While the outcome of this lawsuit is yet to be determined, there are a few possible scenarios for Leafly and other third-party platforms. The court may rule in favor of the OCM, upholding the ban on third-party marketing. This would have significant implications not just for Leafly but also for other states that might consider implementing similar regulations.

On the other hand, if the court rules in favor of Leafly, it could set a precedent for future regulations in New York and potentially other states, allowing third-party platforms to continue operating without restrictions. This outcome would be a significant victory for the cannabis industry as it would promote fair treatment and equal opportunities for businesses in this sector.

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