New York judge halts cannabis licenses over lawsuit filed by disabled veterans

A New York judge has halted new cannabis licenses under a program that favors people with previous drug conviction charges following a legal challenge by a group of veterans.

The ruling by Supreme Court Justice Kevin Bryant blocks the Office of Cannabis Management from granting new conditional adult-use recreational dispensary licenses, or processing existing ones, while the legal challenge plays out.

It comes in response to a lawsuit filed by a group of disabled military veterans who argue the system of awarding and issuing licenses to certain social equity applicants violates the state Constitution.

Under the state's cannabis licensing program, entrepreneurs with past cannabis convictions or immediate family members with past convictions are prioritized for the first dispensary licenses. Nonprofit groups that work with former prisoners are also eligible to apply for cannabis licenses.

But the veterans argue in court filings that regulators are usurping the state Legislature's authority by changing the rules that required “the initial adult-use cannabis retail dispensary license application period shall be opened for all applicants at the same time.”

They say regulators failed to adhere to New York’s Marijuana Regulation and Taxation Act by not issuing licenses to disabled service veterans and other minority groups, whom they argue should qualify.

“Individuals like service-disabled veterans, who are also social equity applicants, who should be prioritized under the MRTA – the marijuana regulation taxation act – the plaintiffs are arguing that they’ve been harmed by being left out of this first mover’s advantage, Fatima Afia, an attorney at Rudick Law Group, which represents the veterans.

The lawsuit is the latest blow to the state's rollout of a recreational cannabis market, which has been delayed, in part, by a lawsuit alleging that state regulations illegally gave preference to New York residents for pot licenses.

A ruling by the U.S. Second Circuit Court of Appeals in May allowed New York to begin issuing operating licenses to qualifying pot businesses in most regions of the state.

New York legalized recreational cannabis in 2021 under legislation signed by former Gov. Andrew Cuomo, allowing cultivation and retail sales and setting up a system of taxation and regulation for the new industry. To date, about 10 retail pot shops have opened, state regulators say.

State Sen. Jeremy Cooney, D-Rochester, who chairs the Senate's Subcommittee on Cannabis, said he was "disappointed" by the judge's decision to halt new cannabis licenses while the legal challenge plays out.

"It is no secret that New York’s adult-use cannabis rollout has been slower than expected, and now is not the time to stand in the way of progress made," he said in a statement. "We must focus on awarding non-conditional licenses, which will prioritize social equity candidates and allow more businesses to open."