New York Judge Says Marijuana Regulators Erred in Hemp Enforcement

A New York state judge delivered a setback to state marijuana regulators over an emergency hemp rule enacted over the summer.

Justice Thomas Marcelle found that officials erred procedurally, delivering a legal victory to hemp drink makers who contended the rule could drive them out of business.

The judge said the state Cannabis Control Board and Office of Cannabis Management fell afoul of state’s the emergency rulemaking process when the agencies enacted a rule limiting the amount of THC in hemp-based beverages in July, Law360 reported. Marcelle granted a preliminary injunction to hemp beverage maker North Fork Distribution Inc., which does business as Cycling Frog.

Marcelle found that the regulators didn’t provide sufficient reasoning for the emergency enactment of the rule, which also requires that the office “fully articulate in writing” the reasons that make the situation an emergency, such as specific examples of a threat to public health or safety.

The judge wrote that evidence submitted by the state to back up its actions “at best only reasonably forecasted the potential for trouble” and wasn’t evidence of harm that had been wrought.

Instead, Marcelle found, the agencies were bound to finish a longer public comment period before adopting the THC limit for hemp beverages.

The judge also said he found credible the hemp companies’ argument that regulators simply wanted to divert consumers to state-approved marijuana products, which are essentially competitors for the same market share of THC consumers.

An attorney for Cycling Frog praised the ruling to Law360.

“Cycling Frog and the other plaintiffs look forward to engaging with the state to work productively toward the adoption of permanent rules which serve the twin interests of protecting the public, health and safety, while at the same time fostering the growth of the hemp industry in New York as contemplated by the federal Farm Bill and New York’s cannabis law,” attorney Gary Lerner said.

A spokesperson for the CCB and OCM declined to comment to Law360.

The CCB and OCM have been beset by litigation since the launch of the recreational marijuana licensing and rulemaking began in 2022, including another preliminary injunction that halted most of the conditional adult use retail dispensary (CAURD) licensing in August. Several other lawsuits are also ongoing against the agencies.