New York Social Equity Program Ordered to Not Issue Licenses

A district judge is the New York has issued a preliminary injunction against the New York Office of Cannabis Management, preventing it from issuing licenses in several localities.

Variscite NY One, an LLC owned by Kenneth Gay, requested the injunction as it challenges the state’s decision to award its first cannabis licenses to New Yorkers who have been incarcerated or arrested for the plant.

This injunction prevents the OCM from issuing licenses to applicants under the conditional adult-use retail dispensary (CAURD) program for the following geographic areas in the state:

• Finger Lakes
• Central New York
• Western New York
• Mid-Hudson
• Brooklyn

According to the court filing (attached below), Variscite NY One requested the injunction in order to “preserve the status quo,” as the program had yet to issue any of the CAURD licenses. The company argued that New York’s social equity program runs afoul of the dormant commerce clause, in part because it is not narrowly tailored enough to serve a “legitimate local purpose.”

In issuing his decision, U.S. District Judge Gary Sharpe wrote that the OCM “did not even attempt” to show that its restrictions advanced such a local purpose.

In addition, the court agreed with Variscite that its exclusion from the initial process could cause “irreparable harm” by granting an early advantage to other applicants.

The New York adult-use cannabis program specifically wanted to address the social equity aspect of licensing and chose to award the first licenses to what it calls “justice applicants.” These applicants can be individuals who were convicted of or who had a parent, legal guardian, child, spouse, or dependent convicted of a “marihuana-related” offense in New York state prior to March 2021.

This is a developing story and will be updated as new information becomes available.