This blog was last updated on Sept. 19th, 2023.
The NYS Office of Cannabis Management (OCM) introduced the Conditional Adult-Use Retail Dispensary (CAURD) program in 2021. This program aims to provide equitable opportunities for those most affected by previous cannabis prohibition to participate in the Empire State’s cannabis industry. However, August 2023 legal proceedings argued that the CAURD application process favors “justice-involved” individuals and their immediate families over disabled veterans, opening up questions and doubts about the program’s legal standing.
Hundreds of applicants anxiously await news as this important issue makes its way through New York’s courts. Read on for more information on the nuances of the CAURD program and the unfolding legal saga surrounding licensing in New York.
What is the CAURD program?
After legalizing recreational cannabis in March 2021, the CAURD program was launched by the Office of Cannabis Management (OCM). The initiative aims to provide opportunities to “justice-involved” individuals and their immediate families who had prior convictions for cannabis-related offenses the opportunity to own and operate a conditional adult-use retail dispensary. The program’s goal was to help establish a fair and equitable market of businesses owned by individuals at the core of New York’s long-established cannabis community.
To be eligible under the qualifying business criteria for the CAURD program, at least 30% of the entity must be owned by an individual who is justice-involved. The conviction on cannabis offenses needed to occur before the passing of the Marihuana Regulation and Taxation Act (MRTA) in March 2021. Other requirements for the CAURD program include qualifying business experience and a significant presence in New York State.
The CAURD program is currently the only avenue available to cannabis entrepreneurs wishing to operate an adult-use dispensary in the state. Other types of applicants are awaiting the opportunity to apply for a license of their own.
Why were the OCM and the NYS Cannabis Control Board (CCB) sued?
A lawsuit brought by four New York veterans, Carmine Fiore, William Norgard, Steve Meja, and Dominic Spaccio, argues that the CAURD program, designed for entrepreneurs affected by cannabis enforcement, is unconstitutional.
The plaintiffs allege that under CAURD, state officials favor justice-involved individuals over disabled veterans for licensing. Specifically, the lawsuit alleges that the CCB and OCM failed to set up a legal cannabis market that follows MRTA approved in 2021, which lists “service-disabled veterans” as one of the five priority “social and economic equity” groups to get 50% of adult-use licenses. According to MRTA’s framework, other groups considered for priority include women and distressed farmers.
The lawsuit states that the cannabis regulators in New York exceeded their jurisdiction by establishing the CAURD program and restricting eligibility to justice-involved individuals with successful businesses.
At this time, all CAURD licenses have gone to individuals or partners of “justice-related” individuals.
Fallout from the lawsuit
On August 7, 2023, Judge Kevin Bryant ordered the CCB and OCM to halt awarding or further processing any more CAURD licenses. The OCM is also restrained from approving any more provisional or existing CAURD licenses that have yet to open. This action has put significant financial strain of CAURD applicants, who continue to pay rent on retail spaces while awaiting the fate of their applications.
While New York had prioritized and approved hundreds of retail licenses across the state for people who had been convicted of cannabis offenses, only 23 of these licenses have opened their businesses. The majority, more than 400, still cannot open their doors.
In a hopeful effort, the state furnished a list of 30 applicants they felt had progressed far enough to be exempt from the injunction. While Bryant initially indicated that some would be allowed to proceed, he eventually expressed that not all applicants have met all licensing requirements and instructed the OCM to submit a list “under oath,” leaving all 30 of these businesses in limbo.
“It is clear to this Court upon review of the affidavits that OCM failed to comply with this Court’s Order regarding exemptions to the injunction,” Bryant wrote in the order, which was filed Aug. 30th. “They have submitted a list which, by their own admission, includes licensees who are still finalizing construction and whose post-selection inspections have not been scheduled or completed.”
What happens now?
The current order imposed on New York cannabis regulators will likely continue slowing the rollout period of the Adult-Use Cannabis licenses.
There will be an opportunity for these dispensaries to re-apply in October, with general licensing opening up on Oct. 4, 2023. However, this program expansion opens the doors for the state’s medical cannabis operators and major MSOs – the same ones who secured a majority of New York’s 10 “registered organization” permits years ago. With regulators planning to accept retail or microbusiness applications through Dec. 23rd, 2023, concerns are rising regarding how this will affect small businesses such as CAURD applicants. Meanwhile, more decisions are expected from the court throughout the remainder of 2023.
As this narrative continues to unravel, the future of the CAURD program remains unclear. This is a developing story that’s vital for cannabis entrepreneurs in New York to follow and stay up to date with reliable, accurate information. We encourage readers to follow news sources like NY Cannabis Insider for the latest, and we at CWCBExpo will continue to share CAURD lawsuit updates on LinkedIn, Facebook, and Instagram as they occur.