New York Cannabis Store Rollout for Formerly Convicted Business Owners Could Be in Jeopardy

New York’s program placing the first 150 retail cannabis dispensary licenses into the hands of entrepreneurs with past marijuana convictions is now on pause as a lawsuit into the legitimacy of the program leaves New York Cannabis social equity in limbo.

The state’s Office of Cannabis Management which operates the Conditional Adult-Use Retail Dispensary program (CAURD) was sued last month by three veterans who alleged the program’s requirements are unconstitutional.

The Conditional Adult Use program was designed to give individuals with past marijuana convictions or those with family members affected by the prosecution of Cannabis an opportunity to get their own businesses CAURD licenses to sell.

Those who currently qualify for the program fall under the CAURD eligibility requirement of being “justice-involved individuals.”

The Veteran’s lawsuit argues that the eligibility requirements leave many other applicants who could be identified as “social equity” applicants out and “indefinitely postpones the licensing of hundreds of additional dispensaries necessary to satisfy consumer demand.”

The service-disabled veterans argue the Conditional Adult Use program does not only violate New York’s 2021 Marihuana Regulation and Taxation Act through its exclusionary requirements but that the program effectively violates the Dormant Commerce Clause of the US Constitution which is designed to stop states from regulating commerce in a way that would be discriminatory or would excessively put strain on interstate commerce.

Some dispensaries were originally allowed to continue with plans to open doors after an August 25 hearing on the case but shortly after the ruling, the judge decided to uphold the temporary restraining order against new licenses, creating a statewide pause on more stores being able to open.

New York legalized recreational cannabis in March 2021 after striking a deal to create the Office of Cannabis Management and a robust social equity program with the goal of getting the first cannabis licenses in the hands of those affected by the criminalization of cannabis.

The legal dispensary rollout has been slower than expected. Governor Kathy Hochul hoped to have 20 dispensaries open by the end of 2022 and now almost a year later, the amount of open legal dispensaries has only recently hit 17.

Following the setbacks in New York’s legal cannabis roll out, The New York State subcommittee on cannabis announced on Thursday that it will hold its first public hearing on October 30th in Albany where they hope to hear from multiple different entities effected by the slow roll out.

A side from multiple legal challenges, one of the other hurdles for those looking to thrive in New York’s newly created legal recreational cannabis market is the plethora of illegally operating stores selling cannabis. Although the NYPD has increased raids on these stores, the problem persists according to Bloomberg who reports on the quick reopening of illegal stores raided by the NYPD.

In order to try and incentivize landlords to help with the problem, landlords of illegal weed and tobacco stores can now be fined up to $10,000 when an illegal store is raided after legislation took effect in late July. The legislation follows a City Council Oversight Hearing on the multiple health and safety concerns of having a growing amount of stores selling unregulated cannabis and cigarette items.

“We must support legal vendors who operate within a framework that protects public health and safety, and who are genuinely committed to equity and justice in their business model, “ said Council Member Carlina Rivera while announcing the legislation spearheaded by Council Member Lynn Schulman.

The veterans opposing New York’s cannabis social equity program will have their case back in court on September 15.

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