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In a letter addressed to Justice Kevin Bryant and filed with the court yesterday in Fiore et al v. New York State Cannabis Control Board, et. al., lawyers for the Coalition For Access to Regulated and Safe Cannabis, whose lawsuit against the CCB has been consolidated with Fiore, informed Judge Bryant that they continue to take no position on extending the TRO that stopped the CAURD program in its tracks and that “the best solution for all New Yorkers is to honor the MRTA as written and to open the adult use application for all retail dispensaries immediately.”
The actual intent of the letter, however, was to “correct and supplement the record” on precisely when the date draft regulations for adult-use sales must be approved by the Cannabis Control Board – arguing it could be three months later than the date stated in court by the defendants’ lawyer – and more pointedly, to “express our dismay that Defendants are working to withdraw from settlement discussions despite this Court’s admonition to try to reach a global resolution.”
Even though negotiations between the parties requested by the judge could only be a few days old at best, the letter makes no attempt to explain what issues could have resulted in a cessation of talks. Adding an element of confusion, the letter also characterizes the alleged withdrawal in both the present and past tense. “We were informed this morning that the State and Intervenors are attempting to withdraw from settlement discussions,” wrote David Feuerstein of Feuerstein Kulick, not mentioning who informed them. “We are disappointed – to say the least – that the State and Intervenors so abruptly and unilaterally decided to terminate these discussions and to risk the issuance of an injunction because the CAURD program appears to be a blatant violation of New York’s separation of powers doctrine.”
In his final comments on the matter, Feuerstein told Bryant, “What’s more, since Friday, the Coalition and its counsel have spent countless hours trying to find a solution that would improve New York’s adult-use cannabis market, would benefit all its stakeholders, and would end the instant suit. That the State and Intervenors would terminate those discussions before even hearing the potential solutions (much less entertaining them) is symptomatic of the State’s defiant posture—a posture that has precipitated the current impasse. We, however, remain ready, willing, and able to work towards a resolution that would benefit the entire New York cannabis industry.”
But New York cannabis attorney Jeffrey Hoffman, in his regular Wednesday AMA, had an altogether different take on these discussions in particular, saying, “OCM already said that they’re not even negotiating with the ROs because I think [the ROs] request was, ‘This is all unconstitutional and get rid of it.” ROs in this instance are the Registered Organizations made up of a coalition of companies that include MSOs.
Hoffman continued of the negotiations, “We’ll see if the disabled veterans want to have some kind of settlement, but I don’t think giving them a license would be enough. If you look at some of the disabled veterans, they’ve either got some money themselves or financial backing because they are suing and what they’re doing is not cheap. My guess is they’ve probably got real estate and could get talent to work in their dispensary. So, I think they will probably get a license, which opens in October and they’re the third priority category, so I do think those disabled veterans would be getting licenses anyway, and it’s not clear to me that giving them licenses is enough for them to settle. Maybe it is. Maybe a guarantee that they’ve got it, and we’re done. Maybe it is but maybe it’s not.
“So, I don’t know what the settlement would look like there,” added Hoffman. “If the parties need some help mediating, I’m happy to help, just give me a ring.” Cannabis Business Executive reached out to the Assistant Attorney General’s office, the OCM, and others for comment on the status of negotiations but has not yet received any replies.
“I Dare You”
Attorney Hoffman had other observations about the Fiore lawsuit during his AMA, including describing the inhabitants of CAURD-land – some of whom he counts as clients – as falling into three main categories of folks. “I want them all to get a license,” he insisted “Once they gave Michigan dude a license, they had to give everybody that qualified a license, and I was pitching hard to just give them the licenses at the July [CCB] meeting. There are between 50 and 100 applicants that qualified that were not given licenses yet. I know several of them quite well, and those are the folks that are at most risk. If things go sideways here, they’re the ones that are unfortunately the easiest to tell, ‘Well, you got an application, but you didn’t get a license, and goodbye.’
“That’ll be on the OCM,” added Hoffman. “They could have given everybody a license at the July meeting. If they don’t settle and things go as poorly as they possibly can, or if they just go badly, those folks could be out of luck, and may just be stuck applying in the next round. That would be a crying shame considering OCM knew that the possibility existed that this would happen once they gave out more licenses. They just needed to give it to everybody. They didn’t, and it may be some people applied for CAURD and had all the qualifications they needed, and Michigan dude gets a license, and they don’t. That would be tragic. Borderline criminal. I mean, there’s nothing criminal about it, but it would be borderline criminal for me.. Really, how is that going to happen, but it is now in the realm of possibility.”
That potentially tragic group was the first category in CAURD-land. “The second category is folks that got a preliminary license or are going through the process of identifying their property,” said Hoffman. “Their doing phase two of the application, raising funds if they haven’t done so already, starting to think about employees, deals to get product, all the stuff you have to do to open. Some of them were going to be ready to open this week. My boys Jeremy and Joe were going to be ready to open up this week. They had an inspection date from OCM that got postponed. Why? ‘We can’t do it, guys. We’ve got this lawsuit; we’ve got a TRO which might turn into an injunction.’
“I’m incredibly upset about this,” he added, “but at least the folks that have the preliminary license are in much better condition than the folks who haven’t even gotten a preliminary license. They are at real risk, and if they don’t get it, I’m going to be very pissed off.”
Hoffman also explained the reasons why the second group is much better positioned. “It’s tough to take away something that you’ve given folks,” he said. “Is it possible that we pause these folks from going operational and is that going to really crucify costs those folks who are ready to go? Yes, but at least they got that preliminary license and it’s really hard to take away something that somebody’s got. You start talking about irreparable harm and how do you value the economic damages of a cannabis license? I don’t know. Who knows if you’re going to be successful. If you are it is probably tens of millions of dollars; if you’re not, it’s zero. But yikes, you didn’t even give us a chance because you just yanked our license? Just try to take my clients’ preliminary CAURD license. Go ahead, I dare you. I triple dog dare you. Go ahead. It will make me a lot of money if you do, so go ahead.”
He paused. “I don’t think they will. Think about the big, big, big lawsuits if they do.”
A similar argument can be made for the third and last category of CAURD-land folks. “The folks that are in the best shape,” said Hoffman, “are the ones that have operational authority, because they’re operational.” Their fate hinges on the winning argument in court, but either way, they win.
“The core of the disabled- veterans lawsuit goes after the preliminaries and the folks with other licenses,” he said. “‘Don’t give any more licenses, and don’t let anybody that’s not operational become operational.’ The RO lawsuit says, ‘This is unconstitutional, let’s just void the licenses.’ So, they are going after all three groups.”
The result could be that the middle category is effectively paused until licenses are given out to people in the priority scheme. “First priority is conviction, low income, and you’ve lived most of your life in most-impacted communities – and you’ve got to have all three to be in priority one,” explained Hoffman. “Priority two is distressed farmers, and priority three is disabled veterans. Disabled veterans are suing, so it is possible we are paused until we at least get some licenses to those three priority classes. I think that’s a real possibility if they don’t settle.”
Category three is sitting pretty. “The folks that are already operational are good unless they come for your license,” he added, “and if they come for your license, you’re going to be a millionaire anyway. So, there you go. That’s what I think is happening with the lawsuit in CAURD-land.”
In addition to post-argument memoranda submitted to the court by the parties to the suit and intervenors already recognized by the court, as expected, additional individuals and groups have filed affidavits and orders to show cause for intervention with the court.
A complete list of court filings in Fiore can be found here.
The defendants post-argument memorandum can be found here.
The plaintiffs post-argument memorandum can be found here.
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