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Writer's pictureJason Beck

Struggling, small cannabis farmers file lawsuit against New York regulators

A trade group representing small cannabis farmers in New York is suing state regulators over the structure of the state's commercial cannabis program, claiming it has set up the industry’s smaller operators for failure.



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The lawsuit, filed by the Cannabis Farmers Alliance in Onondaga County Supreme Court, targets the New York Office of Cannabis Management (OCM) and the Cannabis Control Board, accusing them of creating a marketplace without sufficient retail outlets to sell products. The complaint also highlights other shortcomings, including the alleged disregard of operator concerns leading up to the launch of adult-use sales in December 2022.


The plaintiffs argue that the state regulators’ actions have limited business opportunities for small farmers, many of whom are now struggling or facing the threat of failure. They are asking the OCM to take the impact on small farmers into account when making future decisions about licensing.


New York’s recreational cannabis market, which was expected to rapidly grow following the legalization of adult-use sales, has faced numerous challenges since its launch. Initially, the state opened with just one licensed retailer, and nearly two years later, only 229 retailers are operational—far fewer than anticipated.


The market has faced significant delays and setbacks, including litigation, a lack of funding for Conditional Adult Use Retail Dispensary (CAURD) licensees, limited real estate availability, and competition from a thriving unlicensed market. The lawsuit also criticizes the OCM for having many vacant positions and lacking internal controls, pointing to an internal audit initiated by Governor Kathy Hochul that eventually led to the resignation of OCM’s executive director, Chris Alexander, in May.


The case underscores frustrations among small cannabis farmers, who are seeking a more equitable and sustainable cannabis market in the state.

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