Injunction partly lifted on cannabis licenses

A federal appeals court has lifted part of an injunction that had prevented New York state officials from processing license applications for cannabis retailers in several regions of the state.

On Tuesday, the order from the U.S. Court of Appeals for the Second Circuit ended the injunction for the following regions: Central New York, western New York; mid-Hudson; and Brooklyn. The court continued the injunction for the Finger Lakes region.

The state is being sued by Variscite NY One Inc., which claims the state’s cannabis licensing program is discriminatory.

Variscite applied for a license, but, because 51% of the company is owned by an individual who has a cannabis conviction under Michigan law, with no significant connection to New York, Variscite is ineligible for a license.

The state’s program to license cannabis retailers includes provisions that require applicants to be New York residents, or companies with a significant presence in the state. The requirements also favor people with a marijuana-related conviction and who experienced economic disadvantages.

In November, a federal judge granted Variscite’s request for an injunction to prevent license applications from being processed while the lawsuit was pending.

The state challenged the injunction, and, on Tuesday, the Second Circuit lifted the injunction for all the regions included in the original injunction, except the Finger Lakes region.

The Second Circuit decision reflects the position of attorneys for the state. In court papers, the state attorneys wrote that, if the injunction was to stay in effect, it should only apply to the Finger Lakes region, “which is the only region in which plaintiff will be considered for a license.”

State officials “determined that there were a sufficient number of applicants for each geographical region, meaning that each applicant will only be considered for its top-choice region. Plaintiff would thus only be considered for a license in the Finger Lakes region,” according to court filings.

New York State Senator Jeremy Cooney issued a statement on the Second Circuit’s order.

“The Rochester and greater Finger Lakes region was negatively impacted by the failed war on drugs. Its residents, especially members of the Black and Brown community, deserve the opportunity to participate in the social equity programs included within the MRTA legalization,” he wrote.

“While we celebrate the decision of the Second Circuit to lift the injunction for western New York, Hudson Valley, and Brooklyn, we remain hopeful the Finger Lakes Region will soon be permitted to participate in this economic empowerment program administered by the (state) Office of Cannabis Management,” he wrote.

Gov. Kathy Hochul also released a statement on the order.

“New York’s brand-new cannabis industry is making significant progress to promote social equity and right the wrongs of the past, creating the fairest and safest market in the nation. I am pleased that a federal appellate court has limited an injunction in favor of the state of New York,” she wrote.

“New York will not reach its goals for an equitable and thriving adult-use cannabis marketplace until all regions are open for business,” she wrote.

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