“Big Fish want more of the pond.” That’s the first impression one gets when reading about the recent MSO lawsuit in New York. According to facts already present in the public arena, these ten licensees have had a good swim all by themselves in the medical cannabis market pond. Now, they are pushing back against New York’s state-run agencies’ choice to reserve the first one hundred and fifty retail licenses for social equity applicants.
The two agencies established following the 2021 Marijuana Regulation and Taxation Act (MRTA) are the Office of Cannabis Management and its overseer, the Cannabis Control Board. They declared that the first retail licenses for the adult-use market would be granted to “those who had been harmed by the war on drugs.” This does affect medical marijuana licenses in New York as a whole.
Seems like the appropriate thing to do, right? It would be a moral and just action in light of the devastation the war on drugs wreaked on individuals and their communities.
Let’s look a little deeper into this! And we should also ask the question: are the claimants being unfairly restricted?
Once Upon A Time, There Were Ten Licensees…
“When New York State awarded the first of 10 licenses to grow and sell medical marijuana in 2015, the winning bidders rejoiced at the opportunity to control a lucrative, untapped market—but they knew that greater spoils lay ahead.” – NYTimes.com
The above quote sums it up accurately. The article goes on to say – without hyperbole or embellishment – that these vertically integrated multistate operators (MSOs) were anticipating taking a big chunk of New York’s medical marijuana pie, having already established themselves as dominant players in the markets of Illinois and Arizona.
The parties that have joined forces and filed the lawsuit do so under the name “Coalition for Access to Regulated & Safe Cannabis” (CARSC), and among them are New York-based Acreage Holdings, PharmaCann, Green Thumb Industries, and Curaleaf, two aspiring dispensary owners, and an aggrieved medical professional.
Are the Claimants Being Unfairly Restricted?
In the specific case of the MSOs, it appears that these licensees weren’t all that interested in encouraging New York medical cannabis regulators to expand the number of medical marijuana licenses granted in NY or create regulation and oversight mechanisms.
We assume they were just doing what they knew how to do: business as usual. They have accused the OCM and CCB of allowing traders without a marijuana license to proliferate in the state and farmers without a cultivation license.
They have further alleged that in creating the framework, the Conditional Adult-Use Retail Dispensary (CAURD) licenses, they acted improperly, usurping the role of local lawmakers (who have jurisdiction over the creation of policy and regulations to control the granting of licenses).
Lastly, they accuse the OCM and CCB of initiating a process that would delay marijuana licensing in New York City to the detriment of the city’s and the state’s citizenry, local farmers, and small businesses.
But this lawsuit is not only selfish regarding who the first 150 new licensees were likely to be, and importantly where they emerged from, but it also smelled a little bit like corporate greed.
In the specific case of the aspiring dispensaries and the medical professional, it appears that their claims are somewhat aligned with the MSOs, but not the same: the practitioner alleges that his medical practice has suffered as a result of the state’s neglect to act sooner regards the regulation and law enforcement response to the illicit trade. Altogether, CARSC is accusing the OCM of unconstitutional overreach in placing restrictive conditions on the adult-use retail licensing process.
They allege that they are being unfairly restricted. According to legal reasoning, this is more likely the case in the second group of parties: one or more dispensary owners may qualify as social equity applicants. An out-of-state applicant from Michigan has filed a separate lawsuit and has been granted leave to sue, as the Court found him unfairly discriminated against.
The Marijuana Regulation and Taxation Act (MRTA) explicitly states that all applicants should have equal access to retail dispensary licenses. The conditions placed on retail licensing by the OCM and CCB favor New York-based applicants with no valid reason why licensees should only be from New York.
For easy reference, here are the reading materials for this case:
Source: read about the original licensing story.
Source: read about the claimants’ cases from a law firm’s report.
Source: read about the latest news in the lawsuit.
Initially, the OCM and CCB attempted to shut down the lawsuit through Cease and Desist orders. Secondly, they attempted this through the courts but were denied a legal injunction.
This is what OCM’s executive director Chris Alexander had to say: “We are not anti Big Cannabis … The space has been dominated by a few across the country. We want folks to be here, but in New York, you have to compete. You can’t suck up the entirety of the market. There’s going to be big businesses here. I hope the small businesses will become big businesses.”
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