New York’s struggling legal cannabis industry is once again in turmoil after a judge ruled to invalidate state rules banning cannabis advertising and marketing as a violation of commerce and free speech.
Fellow Albany Judge Kevin Bryant last summer cited Drug Enforcement Administration rules that give convicted criminals priority licensing over disabled veterans and other applicants. Other Cannabis Control Commission rules were canceled as illegal.
Legal issues last year put a freeze on licensing and new cannabis store openings for months, while unlicensed cannabis stores sprouted up like weeds across cities and states.
In a chilling 13-page ruling issued Wednesday, Bryant said the Bureau of Cannabis Control issued regulations prohibiting promotion and marketing on third-party platforms without supporting evidence; All I could say was that it came out of thin air.
“There is no record of exactly how OCM developed its regulations,” Bryant said.
“This court must find that its conclusions are arbitrary and capricious and that there is no substantial basis in the record to support defendant.” [OCM’s] action. This regulation unconstitutionally violates petitioners’ right to free speech. ”
The ruling also struck down a ban on third-party marketing that also covers price tags for cannabis products such as loose flower, joints and gummies.
Cannabis businesses expressed concern that the ruling appears to override virtually all of OCM’s rules.
But the judge amended his ruling Thursday to limit its impact to businesses that are prohibited from advertising.
The lawsuit was filed by Seattle-based third-party cannabis promoter Leafly, a licensed cannabis dispensary located in the upstate town of Rensselaer.
Stage One Pharmacy and one of its customers, Rosanna St. John, were also parties to the lawsuit.
The plaintiffs argued that the state OCM prohibited Stage One from contracting with Leafly to promote cannabis products on Leafly’s site.
“We are pleased to hear that the court agreed with our arguments, and we could not be more pleased to support New York consumers and licensed retailers with Leafly’s full suite of products and services.” Leafly said in a statement.
“We hope that this decision will ultimately lead to a healthy and stable adult-use market in the state. We cannot stress this enough: It is critical that licensed retailers have equal access to advertising and marketing tools that are critical to success in a competitive environment.”
The Journal has reached out to OCM and state Attorney General Letitia James’s office (OCM’s attorney) for comment.
Gov. Kathy Hochul, who oversees OCM, did not comment Thursday when asked about the ruling by reporters in Albany.
She recently initiated a review and potential review of OCM’s licensing and management.
Judge Bryant ordered the state to pay the plaintiffs’ legal costs.
Additional reporting by Vaughn Golden
