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That penetrating sound emanating from New York Friday evening was the collective sigh of relief from hundreds of provisional CAURD licensees upon hearing the news that Supreme Court Judge Kevin Bryant has signed the stipulated settlement that had been reached between the parties in the Fiore lawsuit against state cannabis regulators. That lawsuit had resulted in a preliminary injunction that halted the state’s troubled (and probably unconstitutional) CAURD program…until now. Judge Kevin Bryant had ten days from the presentation of the settlement stipulations to the court on November 28 to approve the deals before they became null and void, but didn’t need all of them to decide that enough was enough with this particular and peculiar litigious saga. The same expectation extends to the Coalition lawsuit filed by a group of Registered Organizations, which was also recently settled.
But questions still remain about what the process will be for the 400-plus provisional CAURD applicants, many of whom also submitted separate applications when the state’s general adult-use application period was initiated on October 4. “There’s a lack of information as to what happens with the current provisionals,” said Robert DiPisa, a lawyer with Cole Schotz who has CAURD clients. “What are the steps forward? There’s a lack of guidance, and I’m not sure if that’s because the OCM has been focused on the settlement – which I’m sure they have been – and post-settlement is when we’re going to get those instructions as to what the next steps are for the provisionals.”
We were speaking during a call Thursday, one day before Judge Bryant approved the Fiore settlement but fully anticipating that he would do so. I remarked that the OCM is surely being bombarded with inquiries from lawyers and applicants seeking clarity. “I know that my clients have reached out directly to OCM and have not received any responses,” said DiPisa. Cannabis Business Executive also reached out to the OCM with questions yesterday and has still not received a reply. A LinkedIn post Friday evening indicated the OCM was reaching out to provisional CAURD applicants to let them know more information will be released soon, but we have not verified that.
The lack of specifics abut what to do next is but one issue with a program that had been turned inside-out over the months. “The CAURD program was supposed to help those that have been disproportionately impacted and get them in the mix,” explained DiPisa. “It was a very small population that qualified for it, but the whole point was to give them this preferential treatment when it comes to getting open and operational, so that one of the first doors that you would walk through to purchase adult-use cannabis in New York was from one of these CAURD licensees.
“But you can see the way that things are turning out that that’s just not going to be the case,” he added. “Eighteen or so [CAUIRD stores] were first to open, sure, but the remaining are in this limbo, and I don’t really think that those remaining 400 that you and I were just talking about are going to be able to open prior to all of these other dispensary operators, just from what I’m seeing right now.”
But at least now they will be able to open, which was something that was put into serious doubt when the constitutionality of the CAURD program was challenged in the two lawsuits in arguments that experts said were likely to prevail. That prospect forced provisional CAURD applicants to also file regular adult-use applications on or after October 4, though the percentage of CAURD provisional applicants that are that dual-application situation is unclear.
“I can ask some other attorneys,” said DiPisa, “but attorneys by nature are conservative, so when everything was going on with the Fiore litigation, I don’t see how you don’t apply for the other dispensary license, because you had no guidance from the OCM whatsoever as to what was going to happen with your current license. You also had a window of time within which you needed to apply for the other more traditional dispensary license, and if you didn’t apply within that window, you could have potentially squandered your entire opportunity to shift out of CAURD and go to the more traditional route.
“When you list the pros and cons,” he added, “every time the pros outweigh the cons as to why you should have applied for a traditional dispensary license. So, I would have to say that a majority percentage-wise applied for a traditional dispensary license.”
That, he added, has also resulted in a changed mindset among the provisional CAURD applicants. “Obviously, they want to know what’s going to happen with their CAURD license, but when you reapply, it’s almost like mentally you’re on a different track,” he said. “I mean, they have spent time and money on their CAURD license, and I think they would like to know if they’re going to see some kind of benefit from that license, but I think mentally they’re more, ‘Hey, we just reapplied anyway.’”
Considering all of that, it almost seems as though the CAURD program is more or less moot at this point in time except for how it will impact a select few. “There is a small group who actually saw the benefit from the program, and those are the ones who got operational before the litigation,” responded DiPisa. “But for everyone else, I think the end result is going to be that they are not necessarily going to be first to market as originally anticipated. So, it’s unfortunate, but a very small percentage of the CAURD applicants are actually going to realize the benefit that was intended with respect to being first to market.”
There has also been concern in the legal community that settlements could lead to similar lawsuits in the future, with one New York cannabis lawyer suggesting recently that we will see more of them if these settlements are approved. But DiPisa had another take on the subject.
“The whole premise of this matter was that certain groups were excluded,” he said. “The MRTA application process was supposed to open for everyone simultaneously, and then preferential treatment was supposed to be given to certain groups like social equity, veterans, and minority owned businesses. But instead, the CAURD program only opened it up to those justice-involved individuals to the exclusion of everyone else and didn’t open up the application process at the same time.
“Fast forward a year later,” he continued, “and now the application process has been opened up to everyone at the same time, which was the whole premise for this litigation. So, how does someone come in now and bring the same lawsuit against the OCM? Why wouldn’t they just turn around and apply?”
It remains to be seen which scenario prevails, of course, but even if lawsuits making similar claims are filed, most of the provisional CAURD applicants that also applied for a regular adult-use license should be alright even if the result is not the alleged first to market advantage they were expecting.
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