Recently, New York’s Office of Cannabis Management (OCM) announced an expansion to the state’s number of available Conditional Adult Use Retail Dispensary (CAURD) licenses. As Cannabis Control Board Chair Tremaine Wright and OCM Executive Director Chris Alexander declared in the latest regulatory meeting on March 2, 2023, the agency intends to double licenses to 300, up from the initial 150.
“With this expansion, more entrepreneurs will be able to participate in the first wave of this industry, allowing them to capitalize on the growing demand for cannabis products,” Wright proclaimed in a statement.
New York's Conditional Adult Use Retail Dispensary (CAURD) Program: Which Cannabis Dispensaries Are Open in the State?
The CAURD program helps the state prioritize licensing social equity applicants and people from communities harmed by the War on Drugs into the legal cannabis sector. Eligible applicants must be either “justice-involved” entrepreneurs who have cannabis-related convictions (or are direct relatives of qualifying individuals), or a nonprofit organization with a mission that can demonstrably benefit from being involved in the cannabis industry. The OCM’s limited portal for the program was open for just over a month from August to September 2022, receiving more than 900 applications. At the time of this writing, New York has granted 66 CAURD licenses thus far, including those given to nonprofits like Housing Works, The Doe Fund and LIFE Camp.
Despite this progress only four dispensaries have officially launched: Housing Works Cannabis Co, Smacked Village, and Union Square Travel Agency: A Cannabis Store are all located in Lower Manhattan. Just Breathe., in Binghamton, is Upstate New York’s sole retailer, supported in partnership with the New York Urban League.
One aspect of the CAURD program is that license holders are meant to be supported in finding and building out their locations by the Dormitory Authority of the State of New York (DASNY), but the agency has seen a fair share of criticism over what some view as its too-slow pacing of the process and for failing to raise a promised $150 million in capital as part of an originally planned public-private venture.
Office of Cannabis Managment's Chris Alexander and Damian Fagon on Expanding CAURD Licenses
Chris Alexander explained that it was partially the feedback from applicants who are choosing to provide their own storefronts rather than go through DASNY which caused the OCM to consider expanding the CAURD program’s licenses. “In recognition of this strong pool of applicants, the ability of some of these individuals to bring their own locations, and for us to stretch the resources further… and our desire to expand the market as quickly as possible, we’re excited to announce we’re expanding the CAURD program to 300 licensees,” Alexander said.
OCM Chief Equity Officer Damian Fagon cheered the decision: “More stores means more locations for New York farmers to sell their harvests, more convenience for consumers to make the right decisions and purchase safer product, and twice as many opportunities for New Yorkers harmed by over-policing during cannabis prohibition.”
What's Different For the Next 150 CAURD License Holders?
According to Alexander, the expanded program will still secure a DASNY space to the first 150 license holders if they need one. The second group may not have the same guarantee, but the Executive Director assured the public that should businesses in the first half decline a DASNY location, that will mean an increased chance of availability for those in the next cohort. He went on to note that doubling the CAURD licenses “reflects a great interest… in New York’s cannabis industry, and a high level of competency” among the numerous applicants.
Many New Yorkers in the cannabis industry have reacted positively to the news, affirming the OCM’s decision as one that upholds the agency’s stated commitment to social equity and uplifting the communities disproportionately impacted by overcriminalization of the plant.
What Does Expanding CAURD Mean For the Variscite NY One Injunction?
Several analysts and legal experts have also pointed out that changing the number of CAURD licenses could help the OCM escape the ongoing problems caused by the Variscite NY One litigation. In November 2022, a federal judge approved an injunction that prevented the agency from issuing any licenses in the Finger Lakes, Central New York, Western New York, Mid-Hudson, and Brooklyn regions. The case, Variscite NY One, Inc. v State of New York et al, stemmed from a Michigan-based entrepreneur’s complaint that he had been rejected for a CAURD license because he didn’t meet the application’s New York residency requirements. Variscite owner Kenneth Gay argued that as a justice-involved individual, he shouldn’t be denied a license simply because he’s never resided in New York.
In the Variscite complaint, Gay and his attorney Christian Kernkamp alleged that certain provisions of both the CAURD program and New York’s cannabis law violate the U.S. Constitution’s Dormant Commerce Clause by “directly [discriminating] against interstate commerce.” This argument had some precedent in another case, Northeast Patients Group v Maine Department of Administrative and Financial Services et al, where the state of Maine’s residency rules for cannabis businesses were also similarly challenged. First filed in 2020, the Maine case was ultimately resolved in the summer of 2022, just days before New York’s CAURD portal opened, and the First Circuit Court of Appeals ruled decidedly that such requirements were legally unenforceable. Interestingly, the Court’s ruling found that despite federal prohibition of cannabis, there is some basis to believe that a national, legal, medical marijuana market exists.
Given all this, it’s possible that expanding New York’s CAURD program would cause the OCM to void its residency requirements just like cannabis regulators in the state of Maine eventually did. Should this occur, it would end the Variscite injunction, open New York for a full retail rollout, and potentially even allow Gay a shot at a license. (How well his business would fare in the aftermath would be another story altogether.)
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For more information about New York State's cannabis industry, visit cannabis.ny.gov.
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Featured image: New York Cannabis Control Board Chair Tremaine Wright and Office of Cannabis Management Executive Director Chris Alexander at the opening of Housing Works Cannabis Co, the state's first adult-use legal dispensary, December 2022 (C) Sam C. Long / Honeysuckle Media, Inc. @tissuekulture