OCM Settles CAURD Program Lawsuits

On Monday, November 27, 2023, New York State’s Cannabis Control Board and Office of Cannabis Management (the “OCM”) voted to approve settlement agreements for two active lawsuits against the OCM in the New York State Supreme Court, Albany County.  These settlements were accepted and approved by Hon. Kevin Bryant, the judge in both cases, on Friday, December 1, 2023.

In the first lawsuit, entitled Coalition for Access to Regulated & Safe Cannabis v. New York State Cannabis Control Board, et al., Index No. 902390-23, the Coalition (an association of registered organizations (“ROs”) that are licensed to sell medical marijuana in New York State), claimed that the OCM’s Conditional Adult Use Retail Dispensary (“CAURD”) program violated the 2021 Marijuana Regulation and Taxation Act (the “MRTA”) by creating a new license class and priority scheme, and sought to open the license application process to “all applicants at the same time.”

According to the terms of the settlement, the OCM has agreed to approve the RO’s transition to the adult-use licenses specified in MRTA § 68-a (for dispensing ROs, or “ROD” licensees) and/or MRTA § 68-b (for non-dispensing ROs) by December 8, 2023 (provided that the ROs have provided all materials required for a transition application and satisfy OCM’s technical requirements for transitioning to the adult-use market), and shall authorize each approved RO to commence all permitted adult-use cannabis activity beginning on the date immediately following the December meeting where the transition applications are approved.  Additionally, the OCM shall authorize all ROD licensees to open their first co-located adult-use dispensary on or before December 29, 2023, and to open their second and third co-located adult-use dispensaries by June 29, 2024.

In the second lawsuit, entitled Carmine Fiore, William Norgard, Steve Mejia, and Dominic Spaccio v. New York State Cannabis Control Board, Index No. 907282-23, the Plaintiffs, who are service-disabled veterans, also challenged the validity and constitutionality of the CAURD program, alleging discrimination against certain groups (particularly service-disabled veterans), which led to an injunction being issued by the Court on August 18, 2023, preventing the OCM from “further processing, approving or investigating pending applications for CAURD licenses.”

In addition to securing an adult use retail dispensary license for each Plaintiff in the case (provided the Plaintiff submits all materials required for an adult use retail dispensary license, including the application fee, and satisfies the cannabis law, regulations and guidelines applicable to such license), the settlement in this case requires the OCM to offer certain programs to all SEE applicants, including: (i) one-on-one, individualized application support services at no cost to SEE applicants; (ii) comprehensive cannabis compliance training and business development support services at no cost; and (iii) benefits from any loan-loss reserve program established for SEE licensed adult-use business borrowers to assist them with obtaining commercial financing.  The OCM will also work to create specialized programming for Service-Disabled Veteran-Owned Businesses (“SDVOB”s), including by: (i) establishing a SDVOB taskforce and committing at least one OCM full-time employee to specialize in business development for SDVOBs; (ii) developing, funding and launching a campaign to educate the service-disabled veteran community about the opportunities available in New York and to increase their participation in the adult-use and medical cannabis markets; and (iii) developing a program to expand cannabis research into factors related to veterans’ health.

Although the injunction on the CAURD program will be lifted as part of this settlement, the OCM will not issue any new or additional provisional CAURD licenses until April 1, 2024, while it dedicates its application and licensing resources in the coming months to the current application and licensing window for adult use licenses, including SEE applicant licenses, which closes on Monday, December 18, 2023.

The Wagoner Firm has been following the progress of New York’s cannabis industry from its inception and continues to monitor developments in the fast-moving New York cannabis industry. Our team is readily available to address any inquiries related to the cannabis industry and are committed to providing guidance to prospective applicants and sellers. For further details, please contact our office at (518) 400-0955.