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Sunday, March 26, 2023

Cannabis growers and sellers say ruling will hurt business

People preparing to sell recreational marijuana in New York and those who grew and harvested the state’s first crop fear that a federal ruling blocking retail licenses will delay the start of the upstate industry and hurt their businesses.

US District Court Judge Gary Sharpe issued an injunction Thursday preventing state cannabis regulators from issuing retail licenses in Central New York, Western New York, the Finger Lakes, the of Mid-Hudson and Brooklyn amid a lawsuit from the Variscite company after its application to be one of the state’s first retailers was denied.

Cannabis growers and more than 900 people who applied for the state’s first conditional adult-use retail dispensary licenses are concerned the decision will delay the opening of upstate pot stores.

“The question is what, what will become of all this product now?” asked Patrick Hines, a partner at Hodgson Russ LLP. “Is it wasted, which obviously has real consequences for real people? Or does it move into the existing illicit market, which obviously doesn’t have the same concerns?”

Officials with the state Office of Cannabis Management say they are moving forward with processing hundreds of retail license applications as quickly as possible, and expect the anticipated timeline for the first recreational marijuana sales in New York by the end of the year. stay on track.

New York’s Adult Conditional Use Retail Dispensary Program and related $220 million fund were legislated to support the first 150 retail dispensaries in the state. This first tranche of licenses is reserved for people with a significant presence in the state and a prior marijuana conviction under the old drug laws.

Variscite’s CAURD application was denied because the owner’s cannabis conviction took place in Michigan. The company argues that the denial based on state residency violates constitutional business rules.

Officials with the Office of Cannabis Management expect to expand retail license applications outside of that scope by the middle of next year.

“The fact that this person couldn’t wait another six months, that’s really a shame,” said New York Cannabis Association President Allan Gandelman. “Cast [they] I had to file a lawsuit to stop all these people from running their businesses, it’s really weird.”

Gandelman grew an acre of high-THC cannabis on his farm in Cortland, New York, this year. His plan to supply products to cannabis retailers in the Finger Lakes and Central New York is now on hold.

He says he will drive hundreds of miles to sell to dispensaries in other regions not affected by the ruling if necessary.

“Fresh cannabis flower is really only good for about six months and hopefully we’ll be able to sell all of it within the next six months to the other stores in the other regions,” Gandelman added.

The state’s plans for filing an appeal are unclear. Officials with the state attorney general’s office say the office is reviewing the decision, but would not answer further questions about its intent to challenge Sharpe’s order.

OCM will not comment on pending litigation, but the state’s Cannabis Control Board is expected to issue New York’s first marijuana sales licenses elsewhere in the state later this month.

“We don’t know who is really going to be affected, we just know that people in these regions are going to be affected,” Gandelman said.

The state’s Office of Cannabis Management will continue to finalize additional rules and regulations for people who grow, process and sell marijuana in New York as licensing programs and applications expand next year.

The state Budget Division projects $56 million in projected revenue from marijuana sales in fiscal year 2023 and $95 million in 2024. That’s expected to continue to rise 40-65% per year for the rest of the decade, But those numbers could be much lower than expected depending on how long retail licensing and business openings are delayed by legal challenges.

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