Regulators agreed to a settlement that would save 436 retailers from losing their licenses.
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The New York State cannabis board voted Monday to approve a settlement that would resolve two lawsuits and end a three-month-long freeze on recreational dispensary openings across the state.
The agreement would salvage the state’s interim licensing program, which gives the first opportunities to sell cannabis legally to people who were convicted of marijuana-related offenses and others directly touched by the war on drugs.
The Cannabis Control Board voted unanimously in favor of the settlement during a brief emergency meeting. The parties that sued were expected to submit the agreement to the state supreme court in Ulster County within a day, and the judge overseeing the lawsuits was expected to approve it.
In a statement after the vote, Gov. Kathy Hochul said the settlement “will allow us to move toward this worthy goal, expanding the number of legal cannabis retailers as we continue our significant efforts to shut down illegal storefronts.”
A state judge in Ulster County froze the interim program in August after four service-disabled veterans sued, claiming that they were illegally excluded from applying. They borrowed the argument from a lawsuit filed in March by a coalition of opponents that included four of the state’s medical cannabis companies. The settlement would end both lawsuits. It would also limit avenues for future lawsuits against the program.
Going forward, 436 retail license holders caught up in the litigation would be able to open shops and begin making deliveries, including 23 dispensaries that were ready to open before the stoppage. Regulators would also be able to issue additional licenses.
Jorge Vasquez, a lawyer whose firm, Vasquez Segarra LLP, represented some license holders in the litigation, said the settlement should give stores that are already open “peace of mind” that their licenses won’t be revoked, while licensees that have not opened can finally move forward in their business planning.
Lawyers for the plaintiffs in both lawsuits did not immediately comment on the settlement. Opening more dispensaries is key to relieving a bottleneck that has left most of the state’s 600,000-pound stockpile of cannabis sitting in storage facilities unsold while some farmers and would-be retailers sink into dire financial straits. As a result of the delays with lawsuits and other financial and bureaucratic hurdles, there are just 27 licensed shops and delivery services open across the state, far short of the 150 dispensaries that the state wanted to have open this year.
According to the state’s court filings in October, another 30 retailers were ready to open. Seven were granted exemptions that allowed them to do so.
While the lawsuits were proceeding in October, the state opened a new round of licensing to all prospective applicants. Regulators plan to award up to 1,000 additional retail licenses, in addition to hundreds more for cultivators, processors, distributors, cooperatives and craft businesses.
Although the settlement was welcome news for many people in the state’s cannabis industry, fears of other lawsuits interrupting the program lingered. “We’ve seen that it’s susceptible to challenges,” said Benjamin Rattner, who represents some of the license holders waiting for the outcome of the lawsuits. “I hesitate to say everyone is in the clear.”
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