By:  Ellen Cans

New York cannabis regulators face another lawsuit, similar to that which had previously caused months of delays for New York’s retail legal marijuana rollout last year.

As reported by Crain’s NY, a lawsuit was updated over the holiday break, with the plaintiffs asking for a temporary restraining order and a preliminary injunction to force the court to act quickly to set a retail licensing freeze.  The federal lawsuit, first filed on Dec. 18 in U.S. District Court in the Northern District of New York, asks a judge to block New York regulators from awarding further cannabis licenses.  The lawsuit was filed by Variscite Four LLC and Variscite Five LLC, a marijuana business operator who has already filed multiple lawsuits across the country over various social equity programs.

The lawsuits’ updated restraining order for regulators, would mean more delays for the rollout of legal cannabis dispensaries.  If approved by the judge, the lawsuit could force an immediate halt in new dispensary openings.  A similar lawsuit had caused the exact thing to happen in August, when a judge had ruled in favor of the plaintiff.  Such a ruling, would translate into costly delays for hundreds of the conditional adult use retail dispensary (CAURD) licensees and for winners in the general application window.

“I feel so bad for those CAURD folks. They’ve just gone through hell throughout this process, and to see them possibly have a hold put on again a month after the OCM settled the Fiore lawsuit, my heart goes out for them,” attorney Neil Willner said, referring to the August lawsuit that led to the injunction which was just lifted at the end of November.  Wilner told Crain’s that the case’s legal arguments are nearly “identical” to those presented in the previous case filed in late 2022, which had resulted in CAURD licensing delays across NYC, until it was settled in May 2023.

Per Green Market Report, the plaintiff’s new suit claims that the NYS residency restrictions are unconstitutional and that the applications filed by the plaintiffs during the recent window should have been given “extra priority,” meaning the retail applicants should be fast-tracked.  “Because Plaintiffs satisfy every requirement for the ‘extra priority’ pool except the unconstitutional New York residency preferences, Defendants should process Plaintiffs’ applications in the extra priority pool,” the suit says. “Because Plaintiffs should have received ‘extra priority’ over all other applicant classes – whether general adult use, priority adult use, or CAURD – the court should enjoin Defendants from issuing any licenses.”

Per Crain’s, Wilner explained that in the original 2022 case, the settlement had not actually resolved the legal issues, so the legal door remains open for new similar lawsuits, including this one.  “They’re asking for an injunction just on retail, because of this ‘extra priority’ New York requirement. If they are successful here, that opens the door for a processor applicant or a cultivator applicant to do the exact same thing,” Willner said. “I am surprised we haven’t seen more lawsuits than we have, because of all the settlements that the OCM has entered into to resolve these.”  The lawsuit highlights how litigation can become a powerful obstacle in limited-license markets such as New York, in which the law is not approved federally.

Wilner added that entrants into the legal cannabis market should keep in mind the risks of litigation, when planning to enter the business.