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New York Retail Operators Left In Limbo Again After Court Extends Injunction

New York State’s Office of Cannabis Management (OCM) has been hit with a preliminary injunction prohibiting them from issuing or processing new cannabis licenses. This is in response to a lawsuit filed by service-disabled veterans who are claiming that the OCM created an unconstitutional process where a prior marijuana-related conviction is required to qualify for a license.

The injunction blocks OCM’s current licensing program from issuing new licenses, except for applicants who meet all the criteria before August 7th. This comes as a major blow to small businesses that have already spent significant resources on building out locations in New York and are now left waiting for the outcome of the case.

Licensing Process Halted For Now

The lawsuit filed in the state Supreme Court by veterans claims that the Office of Cannabis Management has unconstitutionally established a licensing process that requires applicants to have a prior marijuana-related conviction. This impedes service-disabled veterans and other minority groups from participating in New York State’s cannabis industry, which they argue is in stark contrast with the Marihuana Regulation and Taxation Act (MRTA).

The service-disabled veterans issued a statement via Spectrum News about the lawsuit.

“From the beginning, our fight has always been for equal access to this new and growing industry,” they said. “We believe in a robust, accessible, and thriving adult-use cannabis sector for New York State and today’s decision-by correctly recognizing the irreparable harms we are facing through the Board’s and OCM’s failures to follow the law-will help put the State back on track toward achieving this goal. OCM has resoundingly failed to create the legal cannabis market envisioned by New York’s Marihuana Regulation and Taxation Act (MRTA), in large part by keeping licenses out of the hands of service-disabled veterans and other minority groups the law prioritizes. Every day that the adult-use program was limited to only the CAURD program was another day the MRTA-designated priority groups and New York State farmers were left out in the cold. We remain steadfast in our responsibility to fight for all the social equity priority groups being overlooked right now by the OCM through the CAURD program.

We look forward to working with the State and the Court to open the program to all eligible applicants.”

The Court’s decision to extend the injunction on New York’s cannabis licensing program not only leaves pending licenses in limbo but also puts a dent in the plans of many retailers across the State. Many small businesses have already invested considerable resources into building out locations across the State in anticipation of obtaining licenses, only to be left without a license and bleeding, waiting for the outcome of this case.

Jeremy Rivera, Owner of Terp Bros Dispensary, and Vladimir Bautista, a pending licensee, had this to say via CBS6 News.

“August 15th was our anticipated grand opening day or give or take one, two days. So, right now, we should’ve been open,”

“Having worked so hard in getting all these steps into place and to have just one lawsuit hold us up, it was disappointing, it was devastating,” said Rivera.

Vladimir Bautista CEO and Co-Founder of Happy Munkey, who is waiting for the ruling to find a storefront for retail, said, “If the timeline gets pushed back too far, we’re at risk of going bankrupt before we even open.”

“I am a victim of the war on drugs, and I know I wouldn’t have the freedoms that I have if it wasn’t for the veterans that served our country. It’s just sad that instead of everyone just figuring out how to open up, other people have to get hurt in the process. I just wish everyone could open up and we can all just try to make our dreams come true.”

Nicholas Cervini, a cannabis attorney based in Albany, also weighed in about the ruling believing that hundreds of thousands of dollars will be wasted because of the roadblock.

“I think the state is doing all they can but there’s just so many roadblocks that keep coming up and hopefully this gets figured out sooner rather than later,” said Cervini. “There’s a lot of money involved, a lot of money on hold, a lot of products that’s on hold, and really just everyone sitting on their hands waiting to see how this unfolds.”

The OCM has responded to the ruling of the New York court, saying.

“The Office of Cannabis Management’s mission is to establish a first-of-its-kind, adult-use cannabis market that works to right the wrongs of the past, and we are proud of the work we’ve done to achieve that goal. We are reviewing the recent Court decision and will be in touch with all licensees to discuss the path forward but we will absolutely apply to the Court for exemptions from the injunction on behalf of provisional licensees who are ready to open as we work to provide access to safer, tested cannabis products.”

Could This Roadblock Favor Large Companies Over Small Businesses?

The court ruling to extend the injunction blocking OCM’s current licensing program from issuing new licenses could possibly be a death blow to some small businesses. This continues to favor companies with significant capital and resources, either able to withstand the delays or coming in after the fact to buy licenses for pennies on the dollar from existing owners with no money left.

This licensing roadblock could leave many small businesses with no choice but to abandon their dreams of owning a cannabis business in New York, leading to hundreds of thousands of dollars and resources lost.

The OCM has maintained that it is trying to create equitable access for all applicants regardless of size or capital availability; however, this ruling could be seen as it goes against what they have been striving for. The extended injunction will prevent the OCM from providing access to businesses with limited resources. It will leave many of these smaller companies unable to compete in an already highly competitive field.

It remains to be seen how the OCM and New York State plan on dealing with this roadblock to keep all hopeful licensees on an even playing field. The Court’s decision to extend the injunction has put many retail operators across the State in limbo again, leaving them waiting for updates on the case.

Though the OCM has responded, saying they are working on providing access to safer cannabis products, it is unclear how they plan to address and remedy the roadblock so that all applicants have equal opportunity to receive their licenses. The success of many small businesses, social equity applicants, and the broader cannabis industry remains in the hands of New York State and its court system.

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