New York judge halts CAURD licensing and permits

Four New Yorkers who served in the US Armed Forces have filed lawsuits: among other thingsGov. Kathy Hochul’s administration has accused state officials of favoring convicted drug felons over disabled veterinarians when issuing licenses to sell legal marijuana. The plaintiffs have their first success.

On August 7, 2023, Judge Kevin Bryant of the New York Supreme Court, County of Albany, ordered the New York Cannabis Control Board (“CCB”) and the Office of Cannabis Management (“OCM”) from award or further processing such rights are excluded from Other Conditional Adult Retail Pharmacy Licenses (“CAURD”). OCM is also barred from granting an operating license to provisional or existing CAURD licenses pending further court order. The parties are expected back in court today, August 9, to discuss the merits of the motion on which the injunction was issued.

The CAURD lawsuit

The lawsuit alleges that the CCB and OCM failed to establish a legal cannabis market as provided for in New York’s Marijuana Regulation and Taxation Act (“MRTA”), passed in 2021, which specifically recognizes disabled veterinarians as one of the five priority “social… and Economic Equality”. Groups are to receive at least 50% of employment opportunities in the burgeoning cannabis industry.

The five groups delineated in the MRTA are (1) felons convicted of marijuana-related offenses, (2) disabled veterans, (3) women-owned businesses, (4) minority-owned businesses, and (5) distressed farmers.

The CAURD program specifically excluded disabled veterinarians from issuing CAURD licenses. To date, all CAURD licenses have gone to “justice participants” individuals or associates of drug criminals, as well as applicants from other categories.

The lawsuit is asking for an injunction to stop the issuance of licenses that bar veterinarians. She alleges that state regulators violated the separation of powers doctrine and superseded their ruling with the law approved by the legislature.

Specifically, the lawsuit alleges that the defendants created a new “social justice” policy that is inconsistent with the Legislature’s priorities — namely, the CAURD program — because none of the provisions of the MRTA base “social justice” on ” persons involved in justice” with “qualification” limited corporations.”

In other words, the lawsuit alleges that the defendants invented a new category of licenses out of thin air that contradicted legal requirements. As such, no social justice applicant (e.g. war veterans) or any other applicants were allowed to apply (let alone be open) to an adult retail pharmacy.

The lawsuit further alleges that the defendants’ conduct directly violates the express mandate of the legislature in the MRTA for the CCB and/or OCM to open the first application period for the retail cannabis license for adult use for all applicants at the same time.

It is alleged that the Defendants’ publicization of the CAURD program – and their decision to open the application window only to CAURD applicants – reflects the Defendants’ own ideas of social and economic justice and constitutes improper legislation by an administrative authority. Rather, it is a version of social justice conjured up by unelected officials who, as administrators, do not have the authority to make such social and economic policy decisions.

Specifically, defendants’ attorneys, in challenging the temporary relief sought by plaintiffs, contended that they do not expect to approve any new interim CAURD licenses. The attorney explained that such approval would require a meeting of the Cannabis Control Board and such a meeting would not be held again until September. However, Defendants anticipate that they will continue to review application files and engage in other activities related to the “processing” of CAURD applications – such as reviewing applicants’ responses to Defendants’ requests for additional information from specific applicants or screening the results of various background checks.

This is a very important litigation to keep an eye on, especially for the hundreds of CAURD applicants who are in the midst of important business planning decisions such as renting real estate and taking on investments. Stay tuned for updates on the Canna Law Blog.

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