New York's cannabis landscape is undergoing significant changes following a recent settlement approved by a New York State Supreme Court Justice in Ulster County on December 1, 2023.
This settlement, brought forth by the New York State Cannabis Control Board (CCB), effectively resolves two cannabis-related lawsuits that had cast a shadow over the state's burgeoning cannabis industry.
One of these lawsuits, known as Carmine Fiore, et al v. New York State Cannabis Control Board, was initiated by a group of military veterans. They challenged the validity and constitutionality of the state's Conditional Adult-Use Retail Dispensary (CAURD) program, designed to provide opportunities for those impacted by the strict enforcement of cannabis laws over the years. The veterans argued that the program, while well-intentioned, unfairly excluded other social equity groups such as veterans and women from the initial provisional licensing process.
The legal battle led to a temporary injunction on August 7, 2023, which prevented the CCB from awarding additional provisional CAURD licenses and halted the progress of current license holders. At that time, over 400 CAURD program licenses had been granted, but fewer than 30 had officially commenced operations due to the legal dispute.
In a pivotal turn of events, the plaintiffs proposed a settlement that was approved by the CCB on November 27, 2023. The settlement not only grants an adult-use retail dispensary license to each plaintiff but also ensures that the CCB takes the necessary steps to facilitate the operational launch of these licensed dispensaries, subject to statutory requirements.
Additionally, the CCB is now obligated to collaborate with the Division of Service-Disabled Veterans Business Development to provide more opportunities for military veterans in the licensing process.
Regarding CAURD licenses, the settlement imposes restrictions on the issuance of additional licenses in the near future. The CCB is prohibited from issuing further provisional CAURD licenses until April 1, 2024. This decision allows the New York State Office of Cannabis Management (OCM) to prioritize the processing of adult-use licenses, including Social and Economic Equity (SEE) applications.
The implications of this settlement are far-reaching. The lifting of the injunction and the terms of the agreement will lead to a flurry of activity in New York's legal cannabis industry.
The 436 CAURD program licenses, including 23 dispensaries poised to open, will energize the cannabis market. Businesses will rush to prepare storefronts and hire staff, while the surplus of 600,000 pounds of cannabis held by New York's cannabis farmers, processors, and distributors will find new outlets, alleviating financial pressures on the industry.
Furthermore, the delay in granting future CAURD licenses until April 2024 creates an opportunity for entrepreneurs to enter the market during the initial round of licensing. The deadline for applications for Adult-Use Cannabis Licenses, spanning cultivators, processors, distributors, cooperatives, craft businesses, and retail dispensaries, was initially set for December 4, 2023, but has been extended to December 18, 2023, at 5 p.m. This extension provides hopeful cannabis entrepreneurs with more time to navigate the application process and become part of New York's evolving cannabis landscape.
In another significant development for New York's legal cannabis industry, the Cannabis Control Board (CCB) has granted approval to six Registered Organizations (ROs) to commence adult-use cannabis sales starting December 29, 2023. These ROs, which are currently licensed medical cannabis companies, include some of the nation's leading multi-state operators. This decision marks a pivotal moment in the state's efforts to broaden access to cannabis and combat the illicit market. We delve into the details of this development and its potential implications.
The Six Approved ROs
The six companies that have received approval from the CCB to initiate adult-use cannabis sales in New York are:
- Columbia Care NY
- Curaleaf NY LLC
- Etain LLC, owned by Riv Capital
- NYCANNA LLC, owned by Acreage Holdings Inc.
- PharmaCann of New York LLC
- Valley Agriceuticals LLC, owned by Cresco Labs
Expanding Access to Adult-Use Cannabis
These ROs will be allowed to sell adult-use cannabis at their existing medical cannabis dispensaries, with plans to expand to three locations in the near future. This expansion will provide New Yorkers with more convenient access to legal cannabis products and help reduce the influence of the illicit market.
Diversity and Independent Brands
To promote diversity and address concerns about the impact on smaller cannabis sellers, the CCB has mandated that each of these dispensaries must reserve half of their shelf space for independent cannabis brands not owned by any of the ROs. This decision aims to create a level playing field and ensure that a variety of products and brands are available to consumers.
Challenges Faced by Social Equity Businesses
The CCB initially sought to give social equity businesses and independent sellers a first-mover advantage in the cannabis market. However, this advantage was hindered by the previously mentioned lawsuits, preventing smaller businesses from obtaining licenses. Consequently, hundreds of unlicensed stores emerged in the state, prompting the CCB to expedite approvals for legitimately licensed shops.
Growers Showcase Initiative
In an effort to address the delay faced by independent businesses, the CCB introduced a "growers showcase" initiative. This initiative allowed cultivators to sell their products in farmers market-style events, providing them with exposure and potential sales opportunities. However, the CCB has indicated that these showcases will not continue after January 1, suggesting they were always intended as a temporary solution.
Although many in the industry throughout the supply chain would like to see the Growers Showcases continue into the new year or perhaps evolve into a Co-Op-style model.
These recent moves in New York are a significant milestone for the state's cannabis industry. It represents a step toward expanding legal access, reducing the illicit market's influence, and promoting diversity in product offerings.
While the road to a thriving cannabis market in New York has faced its share of challenges, these developments signal a positive shift in the industry's landscape.
As the state's cannabis market continues to evolve, it will be interesting to see how these changes impact both businesses and consumers in the coming months.