New York Judge Halts Retail Cannabis Licensing Due to Michigan Firm’s Lawsuit

A New York federal district court judge on Thursday blocked officials from issuing the first batch of retail cannabis licenses pending the resolution of a lawsuit filed by a Michigan-based company challenging the license selection requirements, the New York Times reports. The injunction by Judge Gary L. Sharpe affects 63 of the 150 licenses set to be awarded to social-equity applicants.   

The affected licenses include those set to be issued for Brooklyn, Central New York, the Finger Lakes, the Mid-Hudson Area, and Western New York. 

The case, brought by Variscite NY One, argues that requirements that applicants must have a cannabis-related conviction under New York state law and significant ties to the state violate constitutional protections of interstate commerce. Regulators accepted applications for the first 150 retail licenses in August and September. The requirements excluded people who had been arrested on cannabis-related charges in New York, but not convicted and those who had only federal or out-of-state convictions. Applicants must also have been headquartered in the state. 

Variscite argued that it would face irreparable harm if it had to wait for the next round of licenses and that the state could achieve its goals by other means, such as establishing business incubators and job training programs. In his decision, Sharpe said the company has “demonstrated a clear likelihood of success on the merits” of their case. 

Variscite did not qualify for one of the first licenses, according to the complaint, because the company is based in Michigan, where its majority owner, Kenneth Gay, was convicted of a cannabis offense. But the company applied anyway, listing the five regions affected by the injunction as preferred locations on its application. 

Officials had previously indicated that retail cannabis sales would commence before the end of the year, but this lawsuit could delay the industry’s rollout, at least in the five affected regions.