Michigan Man Who Halted NY Licensing Suing Los Angeles

The Michigan resident who brought some New York retail cannabis licensing to a standstill has now also filed suit against the city of Los Angeles, with similar claims that the city’s marijuana licensing rules rely on unconstitutional residency requirements.

Kenneth Gay, the owner of Variscite Inc., obtained an injunction that halted some New York retail licensing, when a district judge ordered New York regulators to cease permitting in five regions until the lawsuit is resolved.

That suit is still ongoing, but the injunction prevented the New York Office of Cannabis Management from issuing 18 retail licenses so far in Brooklyn, central New York, Western New York, the mid-Hudson region, and the Finger Lakes area.

Gay also filed a similar lawsuit against the city of Sacramento in February, which is now headed to the Ninth Circuit Court of Appeals after a California district judge took a pass on deciding the case, Law360 reported. That case involves a different company also owned by Gay: Peridot Tree Inc.

Now, Gay has turned his sights to L.A., with similar claims that the city’s regulatory scheme violates the U.S. Constitution’s dormant commerce clause, Law360 reported.

The L.A. social equity program – and most of its marijuana business licensing to date – has focused on those with cannabis criminal convictions, but it also excludes anyone who doesn’t have such a record from within California and specific “disproportionately impacted areas” in the state.

Gay is targeting the upcoming Dec. 8 lottery in L.A. for 100 more retail storefront permits and alleged that city regulators refused to allow him to enter, since he’s not a California resident.

“Mr. Gay satisfies all three requirements, except that the relevant events occurred in Michigan rather than California,” his lawsuit reads.

Attorney Christian Kernkamp, who represents Gay, told Law360 that his client tried to settle with the city of L.A., but that regulators refused.

Gay is seeking an injunction against the L.A. Department of Cannabis Regulation and a declaration that the rules are unconstitutional, along with reparations for legal fees and costs.