Hundreds of New York cannabis entrepreneurs with dispensary licenses are stuck in limbo after a state judge on Friday delayed his decision on whether to lift an order blocking their stores from opening.
Some of these license holders were days or weeks away from opening their shops when Ulster County Supreme Court Judge Kevin Bryant issued a temporary restraining order earlier this week blocking any new dispensaries from opening and state regulators from issuing new licenses. The judge was expected to rule on Friday on whether to extend or overturn the restraining order, but ended up holding his decision for at least two weeks to allow the parties to come up with a solution among themselves.
Bryant issued the temporary injunction after four service-disabled veterans sued the state Office of Cannabis Management and Cannabis Control Board last week. The veterans said they aspired to open their own cannabis shops but were not eligible for a license under the program that state officials created to launch the legal industry, known as the Conditional Adult Use Retail Dispensary program, or CAURD.
The Marijuana Regulation and Taxation Act, the law that legalized marijuana in New York in 2021, calls for state cannabis officials to establish a social and economic equity plan that prioritizes the consideration of certain applicants and lists “service-disabled veterans” as one of the groups.
At the Friday hearing in Kingston, a lawyer for the veterans argued that members of the state Office of Cannabis Management and Cannabis Control Board unconstitutionally usurped the authority of state lawmakers when they created the CAURD program. He said the program cherry picks from the broader range of criteria the Marijuana Regulation and Taxation Act dictates should be taken into account when prioritizing social equity applicants, including veteran status.
He went on to argue that his clients were missing out on economic opportunities by not having a “first-mover advantage” in the recreational cannabis market.
A group of current CAURD license holders who said they would be affected by the injunction were allowed to intervene in the lawsuit, meaning they joined the side of the state in the case. Their lawyer argued at the hearing that they have a lot more to lose in terms of investments than the veteran plaintiffs and would suffer worse harms if a restraining order was made permanent.
A permanent restraining order could put an indefinite pause on the CAURD licensees who want to open new stores, meaning they could lose out on months of revenue, lose the capital they invested entirely, or become unable to pay contracts like lease agreements. Cannabis growers and processors have also been eagerly waiting for more dispensaries to open in order to purchase their products.
More than 400 CAURD licenses have been issued so far, and most recipients are still in the process of opening their shops. Only 23 adult-use dispensaries and delivery services have opened statewide since the retail market launched in December.
“Everything the plaintiffs have submitted is purely speculative,” said Jorge Vasquez, an attorney for the CAURD licensees who joined the case. “It’s not touching on the harm to our clients, the harm to our communities. We have leases that are signed, we have places that are built out.”
Patrick McKeage, first deputy director for the state Office of Cannabis Management, noted in documents submitted to the court that under the state’s social equity plan, service-disabled veterans will be prioritized once dispensary applications are opened up to the general public this fall — meaning they would have to wait only a little longer to apply for a license. The state is currently in the process of finalizing the regulations around general dispensary licenses and applications are supposed to open up in October.
McKeage also argued that state officials were within their authority to create the CAURD program and that state lawmakers supported the program in subsequent budget legislation and amendments to the cannabis law. In the state budget for fiscal year 2022, the Legislature approved a $200 million social equity fund to benefit CAURD licensees.
Bryant ultimately concluded the hearing by asking state cannabis officials and CAURD participants to work with the service-disabled veterans to find a compromise that would benefit everyone.
“You just need to communicate with each other and come up with ideas,” Bryant said. “You can do that quickly if you’re committed.”
The injunction’s impact on dispensary owners
Jeremy Rivera is one of the CAURD licensees who joined the case. In an interview with Gothamist ahead of Friday’s hearing, he said he was just days away from opening a dispensary in Astoria when he first heard about the temporary restraining order earlier this week. In documents submitted to the court, he listed contractual commitments and purchases valued at more than $260,000. He said the news made him break down in tears.
“This is really just me and my partner taking our life savings and trying to open a business that we thought we had a shot in,” Rivera told Gothamist. He said it has been a year-and-a-half since he first started working on his CAURD application.
Rivera, who now has his own construction company, said he initially struggled to find work after he served time for a cannabis conviction. He said he was denied an instruction license he applied for under the U.S. Occupational Safety and Health Administration when he was released from prison in 2018.
“Being a convicted felon isn’t easy,” Rivera said.
Another licensee, Osberg Orduña, spoke at a press conference outside the courthouse ahead of the hearing. He said he is a service-disabled veteran and disagrees with the group that brought the lawsuit.
“The plaintiffs do not speak for me,” said Orduña, adding that the CAURD program already encompasses a diverse group of New Yorkers.
Orduña said his company, the Cannabis Place, already has 12 employees and is making deliveries in New York City and Long Island while he works to open a brick-and-mortar shop in Queens.
“An injunction would put all of these people out of work,” Orduña said at the press conference. “An injunction would hurt our business, our team, the families of our team members and our greater community.”