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Second Circuit Clears Path For Hudson Valley Retail Cannabis Licenses

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Finger Lakes Remains Under Injunction; Only A Handful of Rockland County’s Villages Opted In For Retail Licenses


In a one-paragraph Order, issued late Tuesday afternoon, the Second Circuit Court of Appeals cleared the path for the New York State Office of Cannabis Management (OCM) to issue retail cannabis dispensary licenses in the Hudson Valley, Brooklyn, Central and Western New York. The Circuit Court left in place a ban on the issuance of licenses in the Finger Lakes but set an expedited briefing schedule to address issues affecting that region.

The ban arose last November, when a District Court Judge in the Northern District of New York entered a sweeping order halting OCM’s ability to issue retail licenses in the Hudson Valley and other areas. An out-of-state applicant for dispensary licenses claimed his company was discriminated against based on a system of preferences favoring in-state applicants.

The plaintiff, Variscite NY One, Inc. of Michigan, convinced Judge Gary Sharpe that the system New York used to award licenses violated the Commerce Clause of the US Constitution. The Commerce Clause generally prohibits a state from favoring its own residents over out-of-state applicants in commercial matters.

Judge Sharpe halted the issuance of licenses in every region where Variscite sought one, including the Hudson Valley.

OCM’s efforts to lift the injunction or at least modify it at the District Court level went nowhere. OCM was also denied a stay from the District Court pending appeal.

In seeking to modify the injunction, or limit its application in the District Court, OCM argued that no applicant could have obtained a retail dispensary license in more than one area of the state because the number of applicants in each area precluded any applicant from securing a second regional license. It also argued that even if Variscite had received full credit for in-state residency, it would not have otherwise scored high enough to secure a retail dispensary license.

OCM appealed to the Second Circuit and sought again to have the injunction lifted or modified. Its arguments resulted in a partial victory yesterday, clearing the path for issuance of licenses in every area except for the Finger Lakes – Variscite’s first preference for licensure.

The Second Circuit entered an order late Tuesday afternoon saying, “The district court’s injunction is modified so that it bars the issuance of conditional adult-use retail cannabis dispensary licenses only in the Finger Lakes region.”


The NYS Office of Cannabis Management tweeted that, “We are excited to begin advancing licenses to these regions shortly.”

“New York’s brand-new cannabis industry is making significant progress to promote social equity and right the wrongs of the past, creating the fairest and safest market in the nation,” New York Gov. Kathy Hochul said in a prepared statement. “This decision will allow New York’s social equity entrepreneurs to open safe, regulated cannabis dispensaries in Central New York, Western New York, the Mid-Hudson Region and Brooklyn. For the first time, New Yorkers in nearly every region of the state will have access to safer, high-quality, adult-use cannabis products. I am committed to ensuring New York continues to lead the nation in our safe and equitable approach to the cannabis market.”

The temporary injunction against OCM prevented the issuance of 18 licenses, six of which would have allowed retailers to operate in the Mid-Hudson Region. The identities of the six Mid-Hudson retailers are being withheld pending a formal announcement.

Earlier this month, OCM announced its intent to issue an additional 150 retail dispensary licenses on top of the 150 previously authorized.

According to a database compiled by Office of Cannabis Management, in Rockland County, only the Villages of Haverstraw, Nyack, Piermont, Chestnut Ridge and Airmont have opted-in to allowing retail dispensaries in their municipal borders. These villages have opted-out of allowing on-site consumption lounges.