New York’s beleaguered adult-use cannabis industry has been dealt yet another legal setback this week as a Federal court ruled that its licensing procedure is unconstitutional, just days after the state’s regulator conceded a major oversight threatening dozens of licensees.
On Tuesday (August 12), the US Court of Appeals for the Second Circuit found that the state’s policy of giving priority to license applicants with cannabis-related convictions under New York law violated the dormant Commerce Clause, which bars states from enacting protectionist measures.
Even though numerous states have adopted similar measures, given that interstate trade of cannabis remains federally illegal, New York’s Conditional Adult Use Retail Dispensary (CAURD) scheme, introduced in 2022 as part of a social equity drive to support individuals disproportionately impacted by cannabis prohibition, has now fallen under federal crosshairs.
The plaintiffs, Variscite NY Four LLC and Variscite NY Five LLC, applied for dispensary licences in December 2023 but failed to qualify for priority status because their owners’ cannabis convictions occurred in California rather than New York.
A lower court initially dismissed their challenge, siding with the state’s argument that the dormant Commerce Clause did not apply to cannabis due to these aforementioned interstate restrictions.
Yet, the appeals court reversed that ruling, concluding that ‘Congress has given New York no clear permission to favour its residents’ and that the state’s policy amounted to economic protectionism.
Judge Dennis Jacobs, writing for the majority (2-1), said: “A prohibition intended to eradicate an interstate market is not a licence for states to incubate intrastate markets in the same product.”
Damien Cornwell, the president of the Cannabis Association of New York (CANY), which represents licensees and operators across the state’s supply chain, said of the ruling: “New York State’s cannabis industry is predicated on the idea that it will help bring justice to the individuals and communities harmed by the over-policing of prohibition, and this decision by the federal appeals court undermines our ability to do that.
“Once again, out-of-state actors are taking it upon themselves to attack this program and we must find a path forward that ends this cycle of confusion and puts the New York cannabis industry on track for sustainable success while continuing to lead the nation with its equity first approach.”
It comes amid an already troubling time for New York’s cannabis regulators and businesses, following revelations last month that a monumental blunder from the state’s Office of Cannabis Management (OCM) could see over 100 licensees forced to relocate their businesses.
In what has been described as a ‘catastrophic failure of governance’, the OCM announced in late July that for over two years, it has been approving cannabis store locations based on the wrong zoning rule.
According to its statement, the OCM has been assessing whether dispensaries are too close to a school or place of worship using a door-to-door measurement, similar to how liquor stores are regulated.
However, New York’s cannabis law says dispensaries must be at least 500 feet away from a school’s entire property line, not just the front door.
The post New York’s Cannabis CAURD Scheme Rules Unconstitutional by Federal Court appeared first on Business of Cannabis.
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On Tuesday (August 12), the US Court of Appeals for the Second Circuit found that the state’s policy of giving priority to license applicants with cannabis-related convictions under New York law violated the dormant Commerce Clause, which bars states from enacting protectionist measures.
Even though numerous states have adopted similar measures, given that interstate trade of cannabis remains federally illegal, New York’s Conditional Adult Use Retail Dispensary (CAURD) scheme, introduced in 2022 as part of a social equity drive to support individuals disproportionately impacted by cannabis prohibition, has now fallen under federal crosshairs.
The plaintiffs, Variscite NY Four LLC and Variscite NY Five LLC, applied for dispensary licences in December 2023 but failed to qualify for priority status because their owners’ cannabis convictions occurred in California rather than New York.
A lower court initially dismissed their challenge, siding with the state’s argument that the dormant Commerce Clause did not apply to cannabis due to these aforementioned interstate restrictions.
Yet, the appeals court reversed that ruling, concluding that ‘Congress has given New York no clear permission to favour its residents’ and that the state’s policy amounted to economic protectionism.
Judge Dennis Jacobs, writing for the majority (2-1), said: “A prohibition intended to eradicate an interstate market is not a licence for states to incubate intrastate markets in the same product.”
Damien Cornwell, the president of the Cannabis Association of New York (CANY), which represents licensees and operators across the state’s supply chain, said of the ruling: “New York State’s cannabis industry is predicated on the idea that it will help bring justice to the individuals and communities harmed by the over-policing of prohibition, and this decision by the federal appeals court undermines our ability to do that.
“Once again, out-of-state actors are taking it upon themselves to attack this program and we must find a path forward that ends this cycle of confusion and puts the New York cannabis industry on track for sustainable success while continuing to lead the nation with its equity first approach.”
It comes amid an already troubling time for New York’s cannabis regulators and businesses, following revelations last month that a monumental blunder from the state’s Office of Cannabis Management (OCM) could see over 100 licensees forced to relocate their businesses.
In what has been described as a ‘catastrophic failure of governance’, the OCM announced in late July that for over two years, it has been approving cannabis store locations based on the wrong zoning rule.
According to its statement, the OCM has been assessing whether dispensaries are too close to a school or place of worship using a door-to-door measurement, similar to how liquor stores are regulated.
However, New York’s cannabis law says dispensaries must be at least 500 feet away from a school’s entire property line, not just the front door.
The post New York’s Cannabis CAURD Scheme Rules Unconstitutional by Federal Court appeared first on Business of Cannabis.
Continue reading...
