Michigan resident and cannabis entrepreneur Kenneth Gay has been making headlines for his ongoing legal battles against state and city governments over residency requirements for marijuana business licenses. With lawsuits previously filed against New York and California, Gay has now shifted his focus to Washington State in hopes of removing similar regulations. The controversial nature of these lawsuits has sparked debate around the true intentions behind them.
In his previous lawsuits, Gay has argued that residency requirements for cannabis licenses are unconstitutional and discriminatory. However, critics have raised concerns that these lawsuits are not solely motivated by a desire for justice, but rather a way to gain preferential treatment in the licensing process. This has resulted in thousands of people being told to wait while Gay’s cases are heard, causing frustration and delays in the licensing process.
Most states have implemented residency requirements as part of their cannabis licensing programs, with the intention of prioritizing individuals who have been disproportionately affected by the federal drug war. These requirements typically range from six months to two years and aim to encourage local ownership and prevent monopolization by out-of-state entities.
However, Gay believes that these requirements unfairly hinder his ability to obtain licenses and operate his businesses.
Current Lawsuit Against Washington State Regulators
In his most recent lawsuit, Gay’s company, Peridot Tree WA Inc, is challenging the Washington cannabis board’s decision to reject their retail license application due to failure to meet the state’s six-month residency requirement. Which, in the lawsuit, he claims is unconstitutional under the dormant commerce clause per Green Market Report.
In response to Peridot Tree’s lawsuit, the Washington cannabis board has urged the federal court hearing the lawsuit to go against granting a temporary restraining order that would allow the company to obtain a retail license without meeting the residency requirement. The board’s defense is centered around the importance of promoting local ownership and preventing out-of-state entities from dominating the market. They argue that granting the temporary restraining order would undermine the state’s intentions and create a loophole for out-of-state individuals to gain control of the industry.
Furthermore, the board has cited Gay’s own delays in challenging their decision:
“No matter how Peridot’s delay is measured, it is lengthy: more than eight years from the implementation of the six-month residency requirements; more than three years since the Social Equity Program was created; 13 months since the regulations were adopted; and 82 days since Peridot’s application was denied.
Courts – including this Court – have routinely denied motions for preliminary injunctive relief – let alone temporary restraining orders – based on delays that were comparable or shorter in duration than even the most generous interpretation here.”
The six-month residency requirement is seen as a crucial aspect of achieving these goals and ensuring a fair and equitable licensing process. The board argues that removing this requirement would open the floodgates for out-of-state entities to swoop in and monopolize the market, ultimately harming local businesses and communities.
With the state board standing firm in their defense of the residency requirement, it remains to be seen how the court will rule on this case. Gay’s legal approach has faced criticism from various angles.
Gay’s lawsuits against Washington State are not his first legal challenges to residency requirements for marijuana business licenses. His company, Variscite NY One Inc, filed a lawsuit against New York, arguing that the state’s two-year residency requirement was unconstitutional. The case delayed the rollout of new retails for a significant amount of time, but ultimately, Variscite NY One Inc. obtained a retail license in the Finger Lake area of New York.
Gay and his company also turned to California, where he filed a federal lawsuit in Sacramento to challenge its residency requirements as well to obtain a retail license, which you guessed he believes is unconstitutional.
He then turned his attention to Los Angeles, challenging the city’s social equity lottery last year, which added 100 new retail licenses per MJBizDaily.
Even more recently, per Green Market Report, a new New York lawsuit was filed by companies linked to Gay. Variscite Four LLC and Variscite Five LLC on Dec 18th claim that state residency restrictions are unconstitutional and that the two applications filed by the plaintiffs during a recent window should have received “extra priority”.
Gay’s actions have sparked controversy and criticism, with many questioning the true intentions behind his legal challenges. Some argue that he is exploiting the time constraints of these programs in order to gain preferential treatment toward obtaining licenses for his own benefit.
However, by dragging out these lawsuits, Gay’s actions have also resulted in delays and frustrations for thousands of other individuals looking to enter the cannabis industry through these social equity programs. This not only hinders their economic opportunities but also perpetuates the inequalities and injustices that these programs are meant to address.
While Gay may have his own personal motivations for challenging residency requirements, it is important to consider the larger implications of his actions on the industry and those seeking to enter it. As the legalization and regulation of cannabis continue to evolve, it is crucial to prioritize the values of fairness and equity in order to build a sustainable and equitable industry for all. So, instead of selfishly pursuing his own interests, perhaps Gay should consider the impact of his actions on others before filing any more lawsuits.
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