On February 2, 2024, Judge Anne Nardacci, of the United States District Court for the Northern District of New York, rejected Plaintiffs’ arguments, in Variscite NY Four, LLC v. New York State Cannabis Control Bd., No. 123 CV 01599 AMNCFH, 2024 WL 406490 (N.D.N.Y. Feb. 2, 2024), seeking to impede the progression of New York’s recreational cannabis licensing by asserting that New York’s licensing regulations unfairly discriminate against out-of-state residents, resulting in a violation of the U.S. Constitution. The Plaintiffs’ sought a court ordered injunction, which if granted, would have brought the licensing process to a halt.
The legal landscape has witnessed several challenges to state programs in federal court on the grounds of violating the Dormant Commerce Clause, a constitutional provision prohibiting states from encroaching upon interstate commerce. Even though New York’s cannabis laws do not include a residency requirement, specific applicants may receive extra priority if they meet certain criteria. For instance, the CAURD program may expedite applications for individuals with prior cannabis conviction in New York State.
Judge Nardacci found that the “significant harm” of the injunction would outweigh the benefits of halting the licensing process and that the balance of equities tipped in the Defendants’ favor. Judge Nardacci agreed with the Defendants, asserting that they effectively delineated the substantial adverse impact the injunction would inflict upon New York’s adult-use cannabis industry.
With fewer than 60 licensed dispensaries currently operational and many applicants waiting for approval, halting the cannabis licensing process would bring further obstacles for countless entrepreneurs who have made significant investment in pursuing licensure in New York State. Although the state expects to confront additional legal challenges, the licensing process persists, for now.
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