New York hemp companies sue to overturn new state rules

Claiming new rules governing hemp-derived cannabinoid products cost them “millions of dollars in losses,” state-licensed hemp companies in New York are suing the Office of Cannabis Management in federal court.

Enforcement of revised hemp regulations released in November, coupled with raids meant to crack down on the state’s illicit cannabis market, have had an “immediate and catastrophic effect,” 10 companies claim in a lawsuit filed March 1 in the Southern District of New York.

The suit names as defendants:

• The New York Cannabis Control Board (CCB).
• CCB Chair Tremaine Wright.
• The Office of Cannabis Management (OCM).
• OCM Executive Director Chris Alexander.

The lawsuit claims violations of the hemp companies’ constitutional rights.

The complaint seeks unspecified compensation as well as a judge’s order invalidating the most recent state hemp rules.

An OCM spokesperson declined to comment to MJBizDaily, citing the pending litigation.

The litigants include retailers and beverage makers as well as one company, Washington state-based Cycling Frog, that successfully sued the state over revised hemp regulations released in July.

A New York judge invalidated those rules in November, according to Syracuse.com’s Cannabis Insider, ruling that the state failed to prove that hemp products “misled or harmed” consumers.

That decision resulted in the state on Nov. 17 issuing new rules that are the target of this most recent suit.

Those November rules imposed a mandatory 15-to-1 ratio of CBD to THC in hemp-based products, which “drastically limits the products available for market” and pushes would-be consumers “into the illicit market,” the lawsuit claims.

The litigants “remain ready, willing, and able to work with the State to adopt reasonable regulations to protect against the misuse of hemp,” the plaintiffs’ attorney, Joshua Bauchner, chair of the Cannabis, Hemp and Psychedelics Practice Group at New Jersey-based law firm Mandelbaum Barrett, told MJBizDaily via email.

“We will not standby, however, and allow the State to violate Plaintiffs’ constitutional rights, engage in warrantless searches and seizures, and maliciously disrupt their businesses in a misguided effort to shut down unlicensed cannabis stores, which have nothing to do with hemp businesses operating in full compliance with both state and federal law.”