As New Yorkers enjoy Labor Day weekend, those in the state’s cannabis industry are feeling the pain of the injunction on retail dispensary licensees. The injunction on the Conditional Adult Use Retail Dispensary (CAURD) program, originally issued by New York Supreme Court Judge Kevin Bryant on August 7th, was extended again in a hearing last week and a further ruling, issued on Tuesday August 29th, rejected the license holders hoping to get an exemption. Though pathways are still open for some CAURD licensees, the vast majority are devastated by the latest turn of events.
What's Happening With The CAURD Injunction? New York Supreme Court Ruling In Veterans' Lawsuit Against Office Of Cannabis Management
“I went through more of an emotional roller coaster in these last couple of weeks than I did going in and out of prison,” Jeremy Rivera, co-owner of TerpBros, said in an interview with Politico. “I didn’t cut any corners. I didn’t miss any commas. Everything was done the way [the state] asked.”
Rivera is one of the 463 applicants granted a CAURD license by the Office of Cannabis Management (OCM); he and his business partner Alessandro Cottone, who both have cannabis convictions in their history, received their license in April and expected to open their retail location in Astoria this month. But Judge Bryant’s injunction has put a hold on that and nearly all operations by licensees who have yet to finalize the launch of their stores.
The Supreme Court ruling on August 7th came as an initial response to a lawsuit filed by four service-disabled veterans against the OCM; these plaintiffs claim that the agency’s prioritization of justice-involved entrepreneurs in the CAURD program is unconstitutional and excluded them from being early participants in the state’s legal market. Though the OCM, and many industry stakeholders, have argued that disabled veterans do participate in the program - just not the ones currently complaining - legal experts have countered that the point is moot from a statutory perspective. And as Judge Bryant has noted in his decisions thus far, the language in New York’s cannabis law, the Marijuana Regulation and Tax Act (MRTA), is not written to support prioritizing justice-involved individuals over other groups.
Despite strong advocacy from CAURD license holders and supporters over the past few weeks, the Court’s responses to the case have not gone the way they’d hoped. Numerous licensees and members of the New York CAURD Coalition journeyed to Kingston for a hearing on August 11th in Ulster County Supreme Court. Their enthusiasm quickly turned to frustration at a lackluster performance by the OCM’s counsel, and Judge Bryant’s declaration that he wouldn’t lift the injunction, but instead advised the opposing parties to come to a peaceful resolution. Attempts at brokering a settlement in the ensuing days faltered, prompting the judge to issue his Decision and Order on August 18th that not only upheld the injunction, but also faulted the OCM for jeopardizing the licensees’ personal finances while knowing that the CAURD program could be found unconstitutional.
Latest Supreme Court Hearing Keeps CAURD Injunction In Place; Veterans Object To Licensee Exemptions
A subsequent hearing on August 25th saw the veteran plaintiffs, OCM representatives, and several CAURD license holders return to Kingston. That proceeding finished within an hour, unlike the earlier hearing which had taken nearly thrice the time to complete. During this follow-up, the agency submitted a list of 30 CAURD licensees it believed were eligible for exemption to the injunction, though the veterans’ attorneys voiced their intention to object to several of those included on the list. Jorge Vasquez, an attorney hired to represent certain CAURD license holders such as Coss Marte of CONBUD and Kush Culture LLC, the parent entity of TerpBros, argued that he would be filing on behalf of two of his clients to get them included in the list of exemptions as well.
The plaintiffs’ counsel took the OCM to task for New York’s unbearably slow rollout of the legal cannabis industry. “It was arbitrary and capricious for the OCM not to prosecute the illicit market,” they said, commenting that opening more licensed stores while shutting down unlicensed businesses might have addressed problems such as unsafe products getting into the hands of consumers.
Judge Kevin Bryant Rejects All CAURD Exemptions Submitted By Office Of Cannabis Management
While that hearing ended with Judge Bryant giving both parties ten days to settle a record of objections to who might or might not make the list of possible exemptions, it wasn’t long before His Honor decided the matter for everyone. On August 29th, the judge issued a new decision rejecting all CAURD licensees on the list.
“It is clear to this Court upon review of the affidavits that OCM failed to comply with this Court's Order regarding exemptions to the injunction,” Judge Bryant wrote. “They have submitted a list which, by their own admission, includes licensees who are still finalizing construction and whose post-selection inspections have not been scheduled or completed.”
An affidavit submitted by the OCM’s First Deputy Director Patrick Mckeage, which attempted to give some context for the licensees named on the possible exemption list, did more harm than good to the agency’s argument. Plaintiffs objected to Mckeage’s statements, asserting that they “[raised] real questions about whether the thirty CAURD applicants on the List… in fact ‘met all requirements for licensing’ as required by the Court’s August 18, 2023 order.”
Within his August 29th ruling, the judge agreed. “The affidavit of Mr. Mckeage contains contradictory and confusing assertions that leave significant questions as to whether the licensees on the list have actually met all requirements… Under the circumstances, given the conflicting information contained in the affidavits, absent further detailed information from OCM, this Court will not lift the injunction regarding any of the identified licensees and herein directs OCM to submit '’supporting underlying documentation’ to accompany any further submission regarding exemptions to the injunction.”
Judge Bryant stated that further requests for exemption would be made on a case-by-case basis, with the individual CAURD licensees needing to submit further proof of having met all requirements for licensing prior to August 7th. Many are also showing evidence of financial hardships incurred in the licensing process; Rivera told Politico that he estimates a loss of about $225,000 in potential revenue from not being able to open on his original planned date.
Ryan Martin, a CAURD license holder who has the only business based in the Finger Lakes region to be submitted for exemption, pointed out that the lawsuit would not have gone so far if the state legislature had codified the dispensary license program as it did with the Conditional Cultivator and Processor licenses. Though Governor Kathy Hochul announced plans to prioritize justice-involved entrepreneurs for dispensary licenses back in March 2022, legislators never formally ratified them as part of the Cannabis Law - a fatal flaw in the OCM’s operation over the past year.
Corporate Cannabis Interests Against Social Equity? Erica Ford Examines The Fight Over CAURD
Erica Ford, owner of the nonprofit organization LIFE Camp and the first Black woman to have become a CAURD licensee in November 2022, had her own theory about the motivations behind the veterans’ lawsuit. “To me, it was straight racism,” she said in an interview on Spectrum News’ Inside City Hall. “We could’ve been open if we didn’t have these kinds of things… We’ve got to prove that we spent money and prove that we spent time and labor.”
In an op-ed for the New York Daily News, Ford explored the parallels of the CAURD licensees’ present quagmire to the challenges faced by Civil Rights activists in the past. The essay, published on the exact day of the 1963 March on Washington’s 60th anniversary, began, “Sixty years after the March on Washington and 157 years since the Civil Rights Act of 1866, New York stands at the forefront of a new civil rights battle for economic justice.”
Ford drew attention to the fact that the veterans’ lawsuit is being supported by the Coalition for Access to Regulated & Safe Cannabis (CARSC), which consists of registered medical cannabis operators who are also major corporate industry players - Acreage Holdings, PharmaCann, Green Thumb Industries, and Curaleaf. “Although they all claim to support social equity, the truth is big cannabis corporations are allocating significant resources to circumvent these initiatives that level the playing field for Black and Brown communities to build generational wealth,” she wrote.
The entrepreneur also criticized the OCM for not following through on its promises to license holders. “My face, likeness, and organization were used to promote the CAURD program, but when it was time to benefit, I found myself unsupported. My team worked double and triple time to establish the dispensary, compromising our focus on critical work [with LIFE Camp, an organization that provides services to families impacted by the fallout from the War on Drugs]. We received no state financial support, and now we face uncertainty. We were promised a prioritized market share to protect us from big corporate cannabis, but now we may not be able to proceed. We entered contracts and committed to life-changing opportunities that might no longer be possible… I fear irreparable harm as the inability to become operational continues… We can’t let big multi-state operators rewrite our narrative and push out those who’ve suffered the most.”
Why Did Judge Bryant Continue The CAURD Injunction? Here's Where The Office Of Cannabis Management Went Wrong
What really caused Judge Bryant to side with the plaintiffs in the August 29th decision? According to legal experts, it’s the same stumbling block we’ve seen throughout the case: The OCM has been making some serious contextual mistakes.
Jeffrey Schultz, Partner at Foley Hoag LLP, is an attorney with a long and varied history of advising cannabis industry operators. Reviewing Judge Bryant’s decision, he clarified where the state agency went wrong: “OCM/AG should have explained to the judge how the process works. I posted recently that it wasn't clear if anyone met the exemption worded in the original order, and I took some heat for that. But that's exactly what happened. Intentional or not. NOBODY met the requirements in the Order because anyone who met the requirements is already open.”
OCM/AG should have explained to the judge how the process works. I posted recently that it wasn't clear if anyone met the exemption worded in the original order, and I took some heat for that. But that's exactly what happened. Intentional or not. NOBODY met the requirements in… https://t.co/RXpncI3FGv
— Jeff Schultz (@JSchultz44) August 29, 2023
He continued by sharing what might have worked for the defendants instead. “Had OCM/AG explained to the court that there is a list of CAURDs who submitted post selection applications that are under various stages of review, and that they needed a limited stay from the injunction to (1) finish their review of those PSAs and (2) conduct final inspections to actually determine who ‘met all requirements for licensing’, then perhaps the court would have granted it. Instead, they provided a list of CAURDs who submitted their PSAs without providing critically important context...plus an affidavit regarding the general status of certain of the CAURDs listed that was not requested by the court, further complicating matters and confusing anyone who is not intimately familiar with the process here (which is nearly everybody).
In short, they could have said, ‘Your Honor, nobody that isn't open yet has met all licensing criteria [because] they would have opened if so. And we can't determine who "met all of the licensing criteria" unless you let us do that work. So let us review those applications and do the final inspection, and we'll present a list of those who pass".’
Schultz concluded with the thought that’s been in the heads of everyone observing New York’s transition to the legal market: “This is extremely painful to watch.”
The next hearing in the case of Carmine Fiore et al v Office of Cannabis Management et al will take place on Friday, September 15th at 4PM in Ulster County Supreme Court, Kingston, New York.
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Featured image: Jeremy Rivera of TerpBros (center), with Osbert Orduna of The Cannabis Place, Carson Grant of NY Elite Cannabis, and other CAURD licensees outside the Ulster County courthouse in Kingston (C) Jaime Lubin / Honeysuckle Media, Inc. @jaimelubin
