Anti-Marijuana Group Files Second Lawsuit Against New York

An anti-marijuana group has filed its second lawsuit against the state of New York, this time alleging that the $200 million state fund established to help justice-involved retail licensees obtain real estate for their shops is tantamount to “money laundering.”

The Cannabis Impact Prevention Coalition – along with Cannabis Industry Victims Seeking Justice and eight individuals – filed the federal lawsuit in U.S. District Court in Albany against Gov. Kathy Hochul, the New York Office of Cannabis Management, and several other state officials, the Times-Union reported.

The suit argues that the Dormitory Authority of the State of New York, which oversees the $200 million fund, is violating federal law due to marijuana’s status as a Schedule 1 narcotic.

“It is unlawful to knowingly open, lease, rent, maintain, or use property for the manufacturing, storing, or distribution of controlled substances,” the lawsuit claims. “DASNY normally finances, designs, and builds health and education infrastructure. Ironically, DASNY would instead become the biggest marijuana trafficking landlord in New York.”

“The taxes that the state collects from marijuana sales are the proceeds of marijuana trafficking,” the lawsuit states. “The fact that the state collects these proceeds as taxes does not magically cleanse them of their illegality.”

The suit is the second legal action brought by the coalition, after it filed a separate lawsuit in June in an attempt to overturn the 2021 state law which legalized recreational marijuana in New York, again based on marijuana’s federal illegality.

The social equity fund found its angel investor in June, when cannabis real estate investment firm Chicago Atlantic committed up to $150 million to the fund, which was already seeded with $50 million in state money.

Although the fund was intended to help scores of conditional adult use retail dispensary licensees find locations for their shops, state officials revealed in a court filing in a completely separate lawsuit last month that DASNY had only signed leases for 23 dispensaries thus far, but was in negotiations for another 61, including four that were set to be executed prior to a preliminary injunction that halted all retail licensing.

The lawsuit is just the latest legal action to challenge the rollout of the New York recreational cannabis market. The state is still facing multiple other lawsuits, including two from would-be market participants, and a state judge sided with service-disabled military veterans last month who argued successfully that they were wrongly left out of initial retail permitting.

There’s also a related lawsuit, filed in March by a coalition demanding that regulators open up universal licensing to all stakeholders, including to multistate operators that hold medical marijuana licenses in New York, including Acreage Holdings, Curaleaf, Green Thumb Industries, and PharmaCann.