The defendants in Fiore v. NYSCCB on Thursday appealed the case to the Appellate Division of the Supreme Court for the Third Judicial Department. “Defendants appeal from the 8/18/23 Decision & Order of the Hon. Kevin Bryant, granting in part Plaintiffs’ application for a preliminary injunction,” stated the filing. In a section asking the appellants to specify “the issues proposed to be raised on the appeal,” they noted:
(1) Did Supreme Court err in finding that Plaintiffs established a likelihood of success on the merits on their claim that the Conditional Adult Use Retail Dispensary (“CAURD”) licensing program violated the Marijuana Regulation and Taxation Act?
(2) Did Supreme Court err in finding that Plaintiffs established a likelihood of success on the merits on their claim that the CAURD licensing program violated the separation of powers doctrine?
(3) Did Supreme Court err in finding that Plaintiffs established irreparable harm?
(4) Did Supreme Court err in finding that the balance of the equities favored Plaintiffs on their application for preliminary injunction?
Parties to the appeal include all named plaintiffs and defendants, plus Intervenor LLCs Conbud, 82-J, Kush Culture Industry, and Summit Canna, as well as Non-party Coalition for Access to Regulated and Safe Cannabis.
The CCB also announced Thursday that it “will hold a public meeting of the Board at 10:15 A.M. on Tuesday, September 12, 2023, at Empire State Plaza Convention Center, Meeting Rooms 2 & 3, Albany, NY 12242.” A link to watch it live will be provided five days prior to the meeting.
On Friday, during a scheduled hearing before Judge Bryant, 23 CAURD applicants from a list of 30 supplied by the OCM prior to the hearing were allowed to open immediately by the court. All parties are due back in Judge Bryant’s Kingston courtroom at 10am on Sept. 12.
Tuesday, Judge Bryant reversed course, issuing an order that once again halted the CAURD program in its tracks, including finalizing the 30 applicants listed by OCM as having fulfilled the terms required by the court. “It is not clear to this Court whether any of the thirty identified licensees have completed all post-selection requirements and inspections and it should be clear that those who have not, should not have been included on the list submitted to the Court as set forth in the prior Order,” he wrote.
Judge Kevin Bryant on Friday granted the plaintiffs’ motion for a preliminary injunction in Fiore et al v. New York State Cannabis Control Board et al, but he also directed that the injunction not apply to CAURD licensees who had met all requirements for licensing prior to August 7, 2023, “including but not limited to site plan approval from the CCB and, where applicable, from local municipalities.”
In a 16-page order issued one week after oral arguments and one week before the next scheduled hearing in the case, Judge Bryant, much as he did during oral arguments, found little to dispute in the plaintiffs’ case while all but excoriating the defendants on the shortcomings of their arguments on the merits both in court and in their filings. It is, however, hard to see what the state could have done to overcome the profound challenges presented by the statutory text of MRTA, which, as Judge Bryant noted in his order, “does not mention or outline any process for the administrative creation of additional license categories and neither the phrase ‘Conditional Adult-Use Recreational License,’ nor the term ‘CAURD’ appear anywhere in the MRTA.”
In stark contrast, the judge remained impressed with the plaintiff’s case, “For the purposes of this preliminary application, it is the finding of this Court that the arguments presented by Plaintiffs are in accord with basic rules related to the separation of powers, the relative authority of administrative boards with regards to the drafting and adoption of regulations and their limited authority to act on matter of policy. This Court also finds that, for the purposes of this application, Plaintiffs have presented persuasive and compelling authority in support of their argument that Defendants failed to follow the clear language of the applicable legislation.”
Judge Bryant also acknowledged in a footnote that the court had received ten additional Orders to Show Cause seeking intervenor status since oral arguments, including an application by the New York Social Equity Cannabis Investment Fund (Fund Group). Noting that the submissions were not considered by him in reaching his decision,” the judge pointed out that “the affirmation submitted in support of the Fund Group’s application includes detailed information regarding the social equity fund’s involvement with and funding of the licensing process for the CAURD applicants and the alleged economic harm cited by the Defendant and Intervenor, information which, for some reason, was not placed before this Court with-regard-to this application.”
Adding in a not-so-veiled rebuke of the defense that the information would have been helpful to the court in “determining the proper scope of the injunction,” the judge urged “counsel to incorporate this information in the course of compliance with the instructions set forth in the decretral sections of this decision.”
To that end, Judge Bryant also ordered that “Defendants submit to this Court, on notice, by the close of business on August 22, 2023, a list of all licensees that have met all requirements for licensing,” and that “Defendants convene a meeting of the Board forthwith to begin finalizing applicable regulations for Adult Use Cannabis Licenses as set forth in Article 4 of the MRTA.”
The court, he added, will also consider “further exceptions to this injunction” on a case-by-case basis. Factors the court will use to evaluate those requests include, but are not limited to, “the extent of the licensees’ reasonable reliance on OCM policy with regard to the CAURD program and applicable regulations, and precise timing of the actions and expenses in relation to the pending litigation and the extent to which the expenses at issue would be necessary in order for the potential CAURD licensee too submit an application for an adult-use license once Defendants finalize applicable regulations.”
Judge Bryant further indicated that he will “continue to require regular appearances from counsel before the Court to provide updates and to ensure that appropriate progress is being made to ameliorate whatever impediments exist to the approval of a process that arguable will make these proceedings moot.”
At the end of the day, however, Judge Bryant took pains to describe in detail why OCM bears much of the responsibility for the difficulties so many CAURD licensees will now face. “This Court also notes that it was the Defendant that decided to move forward and accelerate the CAURD program in the face of unresolved litigation and they were undeniably on notice of the alleged constitutional defects at issue,” he wrote in response to the state’s latches argument. “Despite this notice, defendants encouraged potential licensees to incur significant expenses in relation to a program that Defendants knew was at issue. In this regard, there certainly is merit to the argument that Defendants created much of the very harm that they now assert in support of their arguments.”
OCM spokesperson Trivette Knowles provided the following statement to Cannabis Business Executive:
“The Office of Cannabis Management’s mission is to establish a first-of-its-kind, adult-use cannabis market that works to right the wrongs of the past, and we are proud of the work we’ve done to achieve that goal,” said Knowles. “We are reviewing the recent Court decision and will be in touch with all licensees to discuss the path forward but we will absolutely apply to the Court for exemptions from the injunction on behalf of provisional licensees who are ready to open as we work to provide access to safer, tested cannabis products. While today’s ruling is a disappointment, we are committed to working with the Cannabis Control Board to find a way forward that does not derail our efforts to bring the most equitable cannabis market in the nation to life.”
The order can be read here.
Are Negotiations Already Breaking Down in the NY CAURD Lawsuit?
CAURD Lawsuit: NY Judge Beseeches Parties to Compromise
New York CAURD Lawsuit: The Stage is Set for Friday
Tom Hymes, CBE Senior Editor, is a Los Angeles-based writer and editor with over 20 years’ experience covering highly regulated industries. He was born and raised in New York City. He can be reached at [email protected].
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