The Cannabis Impact Prevention Coalition has filed a lawsuit against New York and the state Office of Cannabis Management. The suit challenges the legality of a $200 million Cannabis Social Equity Fund that was established to help open more marijuana retail shops in the state.
This is the second lawsuit that the Cannabis Impact Prevention Coalition has filed challenging New York’s legalized marijuana market. In June, the coalition filed a case in state Supreme Court in Albany that seeks to overturn the 2021 law that legalized marijuana. The civil complaint compares the state’s assertions about the industry, including its prescribed medical uses, to tobacco companies that made fraudulent claims about their products.
The Lawsuit Alleges CAURD to be Unconstitutional
In the second lawsuit, the coalition compares cannabis shops to drug trafficking organizations, stating marijuana outlets remain subject to federal prosecution for violating the Controlled Substance Act. The group also claims the social equity fund, aimed to assist in retail rollouts, is the state’s attempt at a marijuana trafficking operation, using taxpayer funds.
“Effectively, a group of veterans filed a lawsuit stating that the CAURD (Conditional Adult-Use Retail Dispensaries) program isn’t constitutional because the Office of Cannabis Management unveiled this through the Cannabis Control Board,” Ryan McCall, a cannabis law attorney at Tully Rinckey, said. “When you make changes like that, typically it needs to be done through legislature. So their argument is they didn’t do this through legislature.”
What is the Cannabis Social Equity Fund?
Introduced earlier this year, the New York State cannabis Social Equity Investment Fund is a public-private limited partnership. It was formed to position social equity entrepreneurs to succeed in the state’s newly created adult-use cannabis industry.
This initiative has allowed the state to invest in a private fund to finance the leasing and equipping of conditional adult-use retail dispensaries throughout New York for operation by individuals who have been impacted by the inequitable enforcement of cannabis laws. It is the first of its kind in the nation.
Since the social equity fund is a state funded program, McCall doesn’t think the Cannabis Impact Prevention Coalition has a leg to stand on with their lawsuit.
“The state is doing this for recreational cannabis applicants who have been negatively impacted by marijuana-related convictions. There are millions of dollars on the line here. And the coalition would be undoing a lot of what’s happened in other states, as well. The government would have to say ‘The state has invested millions of dollars and we’re just going to shut that down.’ We need to look at the practical effect with that,” McCall said.