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Despite A Bumpy Entrance To Recreational Adult-Use Cannabis, The Future Looks Bright For New York’s Cannabis Retailers With 500 New Licenses Expected
By Tina Traster
Two years ago, the Village of Nyack was one of only a handful of Rockland County municipalities that agreed to allow cannabis dispensaries to operate in its jurisdiction. Every New York State municipality had to decide whether to “opt out” of allowing both or either cannabis dispensaries and/or cannabis lounges but most in Rockland demurred, and passed laws to opt out. Municipalities that didn’t “opt-out” effectively opted-in.
At the time, Nyack, along with Village of Haverstraw, Piermont, Hillburn, and a few Ramapo villages, embraced opening dispensaries as an economic stimulus to the local economy. While these progressive entities envisioned an opportunity to be competitive regionally, most only opted for retail dispensaries.
Mayor-Elect Joe Rand at the Village’s last trustee meeting for 2023 suggested that the board should return to the issue and examine whether it makes sense to also legalize cannabis lounges in the village.
“We opted into cannabis retail sales and now we have several proposals to open dispensaries,” said Rand, who added that the state has been “appallingly slow” in getting the system up and operating. “We’re waiting on dispensary approvals, but it is time to look at on-site consumption. To get out in front of villages and towns. To light a spark. Rather than be in danger of falling behind.”
To date the state has not green-lighted any consumption lounges, though it has given permission for about 40 cannabis retail dispensaries to open.
“We’re always looking for ways to bring vibrancy to the village,” Rand added. He said it might be more advantageous to have people smoking rather than drinking, joking that the upshot of a retail cannabis lounge might be that consumers would be hungry instead of angry.
The “appalling slowness” Rand referred to was largely outside the control of New York State.
New York legalized adult use back in March of 2021, but a series of lawsuits either slowed or stopped the issuance of retail licenses.
In November 2022, more than a year into legalized adult-use sales, no dispensaries had yet opened. Then, an applicant from Michigan successfully sued the Cannabis Control Board (CCB) in federal court, claiming that the preference given to in-state applicants over out-of-state applicants violated the United States Constitution’s Commerce Clause, which generally precludes states from favoring its own residents over residents of other states. The federal court successfully shut down licensing in most of the state until April of 2023, when New York settled the lawsuit by agreeing to grant the out-of-state applicant an adult-use retail license.
In August 2023, a group of disabled veterans sued the state claiming that the preference given to justice-affected applicants (those with criminal convictions for marijuana-related crimes and their families) violated the Marihuana Regulation & Taxation Act (MRTA) which required that all social equity affected applications be treated equally. The preference given to justice-affected applicants over disabled veterans, distressed farmers, and women and minority owned businesses violated the terms of MRTA. An injunction granted in August ceased the processing and issuance of new licenses until just a few weeks ago, and no new retail dispensaries were able to open.
A similar suit brought by multi-state operators also successfully stalled the retail dispensary rollout. That lawsuit charged the preferences given early applicants violated MRTA. These plaintiffs also claimed that MRTA called for all applications for retail dispensaries to open and be processed at the same time.
To settle these suits, the CCB granted licenses to the disabled veteran plaintiffs and opened the application process to all applicants in October. The application deadline closed on December 18th and the CCB has more than 4,000 applications for new retail dispensaries to process.
According to reports, New York cannabis officials will be authorizing up to 1,445 new cannabis licenses in the coming weeks, including at least 500 for retail dispensaries. The balance will go to cultivators, processors, wholesalers and microbusinesses.
One last wrinkle may derail these efforts. A new lawsuit, filed by the same Michigan plaintiff that claimed violations of the Commerce Clause is at it again — claiming once again that out-of-state applicants are disadvantaged in the selection process. The suit was filed on December 18th in the federal district court for the Northern District of New York, the same day that the window closed for new applications.
But, through all of this, the CCB has taken no action on cannabis lounges. None are licensed, there are no applications available in this latest open window, and none have opened anywhere in the state – at least not legally. Some “cannabis clubs” have operated in a gray area of the law.
Mayor-elect Rand may be ahead of the pack when it comes to realizing the potential of cannabis lounges in the village, but the CCB may be months or even years behind him in enabling lounges to apply, get licensed, or open, anywhere in New York state.