Settling Variscite’s case clears the way for retail licenses in the Finger Lakes
On May 30, the Office of Cannabis Management (OCM) agreed to grant Kenneth Gay of Michigan – owner of cannabis company Variscite NY One and the plaintiff in a months-long court case – a Conditional Adult-Use Retail and Dispensary (CAURD) license. Gay’s guaranteed license is a condition of the legal settlement approved by the Cannabis Control Board, a move that cleared the way for the OCM to issue as many as 18 Conditional CAURD licenses to social equity applicants in the Finger Lakes.
His lawsuit challenged the legality of the CUARD program and stalled the state’s cannabis industry rollout. As they noted in their May meeting, members of New York’s Cannabis Control Board believed they were on “strong ground” in the lawsuit but voted in favor of the settlement to end the drawn-out legal battle. In fact, the agreement states that the defendants deny Gay’s allegations “and nothing stated within this settlement agreement shall be construed as admission of such allegations.”
No monetary awards will be made to either side to cover damages, attorney’s fees, expert witnesses or other expenses and costs, states the agreement.
Variscite NY One has an Albany address and was registered with the state a month before the CAURD application deadline, reports the University of Oregon’s Emerald Media Group. However, Gay’s application for a CUARD license was rejected because he did not meet the licensing program requirements to have both a “significant presence” in New York and a criminal record in the state for a marijuana-related conviction.
His lawsuit alleged that those requirements were unconstitutional and violated protections of interstate commerce. A U.S. district judge agreed with his charge and granted an injunction in November prevented dispensary licenses from being issued in five regions across the state: Western New York, the Finger Lakes, Central New York, the Mid-Hudson Region and Brooklyn. In late March, on appeal, the injunction was narrowed to just one region: the Finger Lakes.
Gay is making the same claim in another lawsuit, this one in California, aimed at the City of Sacramento’s Cannabis Opportunity Reinvestment and Equity Program. His company, Peridot Tree Inc., asserts that California’s residency rule for license-holders is unconstitutional.
While New York’s settlement agreement specifies that Gay and Variscite NY One must satisfy the laws, regulations and guidelines applicable to receiving a general (not social equity/CAURD) adult-use dispensary license, Variscite cannot be denied a license. If the application is rejected, it says, Gay and Variscite will be allowed to update it until the OCM grants the license.
The full Settlement Agreement and Stipulation of Dismissal can be found at https://www.documentcloud.org/documents/23830671-variscite-settlement-may-31-2023?responsive=1&title=1