Did a New York State judge just invalidate nearly all of the state’s adult-use cannabis regulations?
Cannabis industry leaders scrambled to understand the ramifications of the surprise decision Wednesday, which could further snarl the ongoing dispensary licensing process for New York’s embattled legal weed rollout.
State Supreme Court Justice Kevin Bryant, in Kingston, ruled that regulations governing the licensure of new dispensaries, prioritization of minority applicants, marketing of cannabis products and dispensary operations were void, according to court documents. Bryant said that the process for devising these regulations, as outlined in an evidentiary record submitted to the court, was bereft of proof needed to justify the rulemaking.
But the full extent and impact of Bryant’s decision remain unclear, as he suggested in his ruling he was only targeting a narrow sub-section of the regulations at issue in the lawsuit. Nevertheless, Bryant went on to state that the entire regulatory framework adopted by the Cannabis Control Board was invalid.
The state’s Office of Cannabis Management did not immediately respond to requests for comment Thursday.
Who brought the newest cannabis lawsuit in NY, and why?
A company called Leafly, a website about cannabis, cannabis products and local dispensaries, brought the lawsuit in September against the Office of Cannabis Management. The company had argued that the Cannabis Control Board’s rules unfairly prevented dispensaries from advertising on their platform and sought to invalidate those particular restrictions.
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Bryant ruled that the arguments and evidence presented to the court by New York regulators were little more than a “post hoc rationalization” of the rules after they were already complete. He explained that this evidence needed to have been considered during the actual regulatory process itself.
“Here, there is no indication that any evidence was actually placed before the administrative agency,” he wrote. “It is not counsel’s role to develop and outline a rational argument in favor of the regulations after the fact.”
In a statement, Leafly celebrated the ruling, saying it would allow dispensaries to have “equal access to important advertising and marketing tools.”
“We are pleased to hear that the court agreed with our claims and we couldn’t be more excited to support consumers and licensed retailers in New York with Leafly’s full suite of products and services,” the company said. “We hope this decision ultimately leads to a healthy, stable adult-use market in the state.”
What does this mean for NY’s cannabis market?
The immediate impact of Bryant’s decision is unclear, as the law undergirding the regulations, the Marihuana Regulation and Taxation Act, remains operative. Marijuana is still legal to possess in New York.
“You are not going to get arrested for possession,” David Feuerstein, co-founder and partner of the boutique cannabis law firm Feuerstein Kulick, said Thursday.
It’s also uncertain whether Bryant meant to invalidate all of the regulations, or just the portions challenged by Leafly.
Whatever the answer is, the ruling itself has already sown confusion within New York’s cannabis market. The Cannabis Association of New York, which represents growers, dispensaries and other industry players, released a statement saying that all of the regulations appear to have been stricken.
“I have full confidence that this too shall pass and that the Court will reach a decision in the best interest of all parties,” said Damien Cornwell, the association’s president.
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Feuerstein acknowledged the confusion surrounding Bryant’s decision, but said he expects the parties to seek clarification from the court.
Under a worst-case scenario, if the regulations are indeed abolished, the legal framework that allows dispensaries to operate would no longer exist.
“The law contemplates that before business is taking place, that there are regulations in place,” Feuerstein said. “You have to have regulations.”
However, Feuerstein cautioned that in practice, dispensaries would likely continue to operate, either because of emergency regulations adopted by the Cannabis Control Board, or because adverse enforcement action against them would be highly unlikely.
Asher Stockler is a reporter for The Journal News and the USA Today Network New York. You can send him an email at astockler@lohud.com. Reach him securely: asher.stockler@protonmail.com.
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