By Brian Lee (Litigation Reporter, New York Law Journal)
blee@alm.com; Twitter: @bleereporter
Updated August 8, 2023 4:57 pm
Link to original article: Click here to view.
Cannabis attorney Robert DiPisa said his phone hasn’t stopped ringing in the wake of a New York trial judge’s temporary order restraining the state from issuing more conditional pot dispensary licenses to justice-involved people.
“As you can imagine, today’s been filled with calls and meetings from clients,” DiPisa, the chair of the Cannabis Law Group at Cole Schotz, said Tuesday. “It’s been crazy.”
The case against the state was brought by four service-disabled veterans, arguing that the Office of Cannabis Management’s creation of the Conditional Adult Use Retail Dispensary license required legislative action, and that the veterans, another social equity group, have suffered damages as they’ve had to wait their turn for licensing consideration.
State Supreme Court Justice Kevin Bryant issued the order, with a show-cause hearing on the matter set for an Ulster County courtroom on Friday.
DiPisa said the order serves to further stall licensing in New York.
“We’re going to find out more on Friday,” he said. “But, if the judge wanted to, he can deem the entire CAURD program as violating separation of powers.”
DiPisa wondered what Bryant’s decision will mean for the approximately 20 CAURD licensees who are already operational, and for their employees, and cultivators and manufacturers who await selling their supply.
“At this point, with the way that we’re looking at it for our clients who have received licenses, we still have to meet our deadlines and our obligations as a licensee,” the attorney said. “And although this order was entered, we have to take more of a wait-and-see approach and keep moving forward, and hope that Friday gives us a little more insight into the court’s plans and what’s on the horizon.”
The lawsuit was filed on Aug. 2, and Bryant issued the temporary order within three business days, an expedited pace that bodes well for the plaintiffs, according to Tully Rinckey senior associate Ryan McCall.
“Typically when judges give these preliminary injunctions,” he said, “and they give them a very short turnaround time, there is a chance that the judge says: ‘Listen, I haven’t heard enough here to disprove my basis for the injunction. I’m going to keep it in effect.’ If that happens, which I think could be somewhat likely at this point, you may begin to see the legislature somewhat take a step back and say, ‘OK, we need to bring this to a vote sooner rather than later.’”
McCall added: “What these (plaintiffs) are saying is, this was unconstitutional from the beginning—and I think that the state is going to have a lot on their hands trying to disprove it.”
The state originally intended to issue 150 CAURD licenses, but through continued expansions has doled out 463.
Meanwhile, the vets’ lawsuit mirrors one that was filed in March by medical marijuana license holders and others hoping to enter the recreational market.
Neil M. Kaufman, managing member of Kaufman McGowan PLLC on Long Island, said OCM regulators had the best of intentions when it created the CAURD program, as it was viewed as a viable way to open the bottleneck at the cultivation level.
“They tried to set up a program that was consistent with the values reflected in the (Marihuana Regulation and Taxation Act), and with the goals that almost everybody in the industry shares to help the people who were so egregiously harmed by the War on Drugs, which was such a horrendously misguided policy,” Kaufman said.
“Unfortunately,” he added, “they don’t seem to have done it in a manner entirely consistent with the statute. And that has created the grounds on which the ROs, in the first case, and now this veterans’ group, punch holes in the CAURD program.”
Kaufman said he believes a financial judgment for the vets may be in order. But he said he doesn’t believe a permanent injunction was necessary to make the plaintiffs whole.
Attorney Abraham Cohn of Cohn Legal PLLC said the vets’ lawsuit is interesting because it tracks, in a parallel way, the U.S. Supreme Court’s rollback on affirmative action in higher ed admissions.
“All of this comes down to what sort of remedial measures can legally be put in place if you want to pursue a social justice objective of trying to level the playing field,” Cohn said. “So depending on where you stand on that, you might feel better or worse about some of the criteria that has at least historically been used in order to award licenses to some and not to others.”
About the Judge
Bryant is a longtime member of the Hudson Valley legal community who joined the bench only recently: The Democrat was sworn in as a New York Supreme Court justice in January 2022. He’s also the first Black man to be elected in the 28-county Third Judicial Department.
Prior to joining the bench, Bryant served six years as corporation counsel for Kingston, and the Albany Law School grad maintained a private practice. He’s also served as a special prosecutor for six municipalities and for both the Ulster County District Attorney and public defender offices.
Kaufman said: “Look, this judge has a lot of pressure on him, because he is either going to issue a ruling on Friday continuing an injunction of the entire CAURD program rollout, which will crush the whole New York adult-use market because the biggest gap in the market is the lack of retail.”
In essence, the judge will be deciding the fate of millions of dollars of unsold cannabis flowers sitting in storage rooms, and in some cases, barns across the state. Cannabis isn’t meant to be stored for long periods of time and is subject to mold, the lawyer said.
A longtime securities lawyer who began representing cannabis clients the past nine years, Kaufman said he’s represented four of the five largest cultivators in California.
“I had really hoped that, with 22 states having gone before it, New York would learn the lessons of those mistakes and be able to implement its adult-use industry efficiently and effectively,” Kaufman said. “And I’ve been disappointed that they have fallen victim to so many of the same temptations and errors that all the states that came before them have faced.”
The state will be defended by Shannan C. Krasnokutski of the New York State Attorney General’s office, who said New York wants to proceed with provisional and approved licenses as the cases progress.
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