A coalition of New York cannabis businesses and advocates has filed a lawsuit against the state's cannabis regulators and officials, challenging the legality and validity of the Conditional Adult Use Retail Dispensary (CAURD) program. The lawsuit, filed on March 16, 2023, by the Coalition for Access to Regulated & Safe Cannabis, claims that the CAURD program was created without proper authority under New York's constitution and that it harms various stakeholders who are eligible to participate in the adult-use cannabis market under the Marijuana Regulation and Taxation Act (MRTA).

The coalition includes several registered organizations that provide medical cannabis products, such as Acreage Holdings, PharmaCann, Green Thumb Industries, and Curaleaf, as well as two prospective retail dispensary applicants and a medical cannabis practitioner.

The lawsuit seeks three main outcomes from the court:

- A declaration that the Office of Cannabis Management (OCM) exceeded its authority by creating the CAURD program without legislative approval and that the program should be abolished;

- An order that requires the Cannabis Control Board (CCB) and OCM to open up the application process for adult-use retail dispensaries immediately and allow anyone who meets the MRTA criteria to apply; and

- An order that requires CCB and OCM to take action against illegal and unlicensed cannabis operators who pose a threat to public health and safety.

The lawsuit argues that by creating an exclusive pathway for certain applicants to obtain retail dispensary licenses through CAURD agreements with registered organizations or social equity applicants, CCB and OCM have violated New York's constitution which grants legislative power only to elected representatives. The lawsuit also claims that CCB and OCM have failed to implement key provisions of MRTA such as social equity programs, community reinvestment funds, veterans’ benefits, women-owned businesses incentives, hemp farmer support, and more. Furthermore, it alleges that CCB and OCM have neglected their duty to enforce cannabis laws against illicit market actors who endanger consumers with untested products.

This lawsuit comes after another legal challenge was filed in January 2023 by a group of social equity applicants who argued that CAURD agreements were unfair and discriminatory. That lawsuit resulted in a temporary restraining order that halted some aspects of the CAURD program until further notice.

The situation is complex and requires further analysis, but it’s expected that New York cannabis industry stakeholders are taking action to try to advance the licensing process. With no access to the full application portal and no clear indication of when it will open, this litigation was an inevitable (and possibly the only option) to compel the OCM and CCB to act. Stay tuned for updates as this litigation progresses.

Jay Kotzker is a partner at Parlatore Law Group with over 15 years of legal experience. He focuses his practice on all areas of intellectual property and cannabis business law, including brand development and protection, and guiding clients through cannabis business licensing, compliance, and operational issues.

Parlatore Law Group Attorney   | Jay.Kotzker@parlatorelawgroup.com | 303-529-0112