New York Hemp Industry Scores Big Win in New York

On Thursday the New York State Supreme Court issued an injunction in favor of several hemp companies and organizations (Hemp Parties) against the New York State Cannabis Control Board (CCB) and other state agencies and officials prohibiting them from implementing and/or enforcing Emergency Regulations adopted in July regarding the processing and retail sale of cannabinoid hemp products. The Emergency Regulations subject to the injunction provide for: (1) a required ratio of CBD or other cannabinoids to THC equaling or exceeding 15:1 in hemp infused products; and (2) per serving and per container limits on the amount of THC such products may contain. In their lawsuit, the Hemp Parties contend that the Emergency Regulations are illegal because (a) they were adopted in violation of the state’s Cannabis Law and Administrative Procedures Act, and (b) they are arbitrary, capricious, without a rational basis, and an abuse of discretion.

The ruling, which can be read in its entirety below, is yet another win by the hemp industry in an ongoing series of lawsuits filed against states seeking injunctions against laws and regulations restricting its activities. The case is North Fork Distribution, et al. v. New York, No. 907325-23 (N.Y. Sup. Ct. Albany Cnty. filed Aug. 4, 2023)

Here is a brief summary- 

After giving a brief history of the 2018 Farm Bill and recent developments in hemp in New York, Supreme Court Justice Thomas Marcelle proceeded to address each of the three elements involved in granting a preliminary injunction:

(1) A probability of success on the merits of the case. In finding that the Hemp Parties met this burden, the court found that justification (Emergency Justification) used by the CCB for promulgating the Emergency Regulations “fails to cite evidence or studies to substantiate that New Yorkers have either been misled or harmed by hemp infused products.” Additionally, the CCB’s Emergency Justification “fails to cite facts showing New Yorkers have either overconsumed or accidentally ingested intoxicating levels of THC.” Finally, Justice Marcelle found that “the Emergency Justification’s parade of horribles that await children from [the Hemp Parties’] products lack specific recital of any actual facts upon which such concerns are based.”

(2) A danger of irreparable harm in the absence of an injunction. The Court found that if an injunction was not granted, the Emergency Regulations would cause irreparable harm to the Hemp Parties because they “have the effect (and purpose) of shifting consumers from [the Hemp Parties] products to [the CCB’s] preferred vendors of similar products intoxicants” thus causing them to lose market share.

(3) A balance of the equities. Finally, the Court found that the Emergency Regulations “may be sufficient to drive [the Hemp Parties] out of business” and that “the concomitant loss of employment will impose desperate economic straits on the workers who have fed, sheltered and provided medical care to their families for the last two years. And in the current difficult market, new employment may not easily be found.” In finding that “equity, like beauty, rests in the eye of the beholder”, Justice Marcelle found that the equities in this case favor the Hemp Parties.

Congratulations to North Fork Distribution, Inc. dba Cycling Frog, Sarene Craft Beer Distributors LLC, the Hemp Beverage Alliance, and One Stop Brew Shop LLC, and their legal team.

Here is the ruling:

November 9, 2023

Rod Kight is an international cannabis lawyer. He represents businesses throughout the cannabis industry. Additionally, Rod speaks at cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the cannabis industry. You can contact him by clicking here.