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Why is a Michigan man blocking New York dispensaries?

Two companies owned by the same man have sued the state of New York and the city of Sacramento. Both lawsuits are challenging dispensary licensing programs that ban out-of-state residents.

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Last week, a federal judge temporarily suspended 63 of the 150 incoming licenses for dispensaries in New York for adult use of cannabis. The state planned to give New York-controlled businesses with cannabis convictions the first batch of adult dispensary licenses later this month.

But a Michigan man-owned company has blocked nearly half of those licenses from issuing a lawsuit arguing that such software discriminates against out-of-state residents and impedes interstate commerce.

Each of the Plaintiff’s accusations, if proven true, violates the Constitution. So a federal judge issued a temporary injunction banning New York from issuing licenses in five boroughs, including Brooklyn and Central New York.

Why is 63 dispensary licensing delayed in New York?

company called Variscite NY OneInc. To obtain a preliminary injunction to restrict the Office of Cannabis Management (OCM) from issuing Conditional Adult Use Recreational Dispensary (CAURD) licenses in certain areas of the state.

Crushed New York-style grass and joint (series)
Dozens of New York dispensaries are stuck in a licensing limbo. (Adobe Stock)

Variscite claims that OCM’s dispensary license application program discriminates against out-of-state operators and prevents interstate commerce, a direct violation of the Passive Trade Clause, which bars states from favoring their economies over a healthy national market.

According to the court, Plaintiff Variscite meets certain criteria for Conditional Recreational Dispensary for Adult Use (CAURD) applicants. One of the requirements for a Variscite check is a majority owner Nonviolent cannabis conviction. The problem is, the conviction was in Michigan, not New York. So the owner, a Michigan guy named Kenneth Jay, was ultimately eliminated from the first round of CAURD licenses.

Who owns Varisett?

A Michigan resident named Kenneth Jay is the majority owner of Variscite New York One, Inc. , which has been recorded in New York State since August. Jeffrey Jensen owns the other 49%, according to court records.

Kenneth Jay and his attorney, Christian Kernkamp, ​​filed a similar lawsuit against the city of Sacramento and its cannabis office in February 2022this time using a business entity called Aquamarine Tree.

Neither Variscite nor Peridot Tree appear to be licensed, prominent, or active in cannabis operations in California, Michigan, or New York. The plaintiff’s attorney told Leafly that their client does not wish to comment on the lawsuit at this time.

According to court records, plaintiff attorney Christian Kernkamp A case 2020 that claimed L.A. County’s COVID-19 tracking laws violated the First and Fourth Amendment rights of a resident and a local sushi restaurant.

Cookies are not associated with this suit

On Thursday (November 17), a LinkedIn post by cannabis attorney David B. Vader rumors that Cookie is behind the lawsuit. Even some cannabis news outlets spread rumours.

Vedder disclosed documents linking Variscite co-owner Jeffrey Jensen to a 2018 cookie dispensary app that failed to get approval in Pasadena, California. After hinting that cookies may be driving the Variscite lawsuit, Vedder directed “internet investigators” on his page to investigate further.

On Friday (November 18), Vedder retracted his statement and publicly apologized for Cookie’s involvement in the case. Vedder said, “Sometimes you have to admit when you’re wrong… After talking to the people at Cookie and getting clarification, and talking to other people as well, I have to tell everyone: There is no connection between Cookie and this lawsuit.” .”

Cookie Berner’s CEO called out the rumors on Instagram, in the comments section of a post by Underground Cannabis News Source @employeea private Instagram page followed by many industry heavyweights. on instagramBerner thanked Feder for clearing things up, writing “Thank you. My apologies too, sometimes things like this get under my skin and I really appreciate getting the truth out there. The bigger we get the bigger our goal. I really appreciate that being clear.”

“As it turns out,” Vedder continued in his apology video, “Cookie, she didn’t end up dealing with this guy.” Feder added that “maybe they’d better not, because look who this guy is. He doesn’t care about New York Social Equity applicants and he’s freezing the whole program for everyone and shutting down many areas from issuing CAURD licenses and maybe who knows how far he’ll go.”

Vedder added, “Bottom line, I was wrong in providing this information without proper framing. And I appreciate cookie-cutter people coming directly to me for clarification. This thing went further than I could have expected.”

“I think a lot of people who hate cookies, or maybe Burner, were just looking for something to hang their hat on (to show) that it’s not really for people.”

david b. ESQ feeder

When did the Variscite vs The State of New York case begin?

varisette The case was filed on September 26, 2022, is the exact day the application window closes from August 25th to September 26th for CAURD applications. One month earlier (August 31), Variscite registered for the first time with the state. The business was created less than a week after the CAURD application portal went live on August 25th.

When asked about the lawsuit’s timeline and intentions, Variskite’s attorney, Christian Kernkamp, ​​told Leafly via email on November 15, “The plaintiff is not issuing a statement at this time but we will be sure to include you if the plaintiff makes a statement in the future.”

Why did the court grant Variscite’s motion to block New York licenses?

Last week (November 10), US District Judge Gary Sharp issued a temporary restraining order for Variscite. The judge cited cases in Maine, Missouri, Oklahoma and Michigan where similar laws have been successfully challenged on constitutional grounds, including the dormant trading clause. The court ultimately ruled that the state’s application requirements “would have a discriminatory effect on out-of-state residents seeking a CAURD license.”

On October 5, the court denied a preliminary application for the temporary order, which would have suspended some licenses at the time. Arguing on behalf of OCM and the state, the new ruling issued Thursday (November 10) says the New York attorney general failed to provide a legitimate purpose for favoring New Yorkers affected by the war on drugs over non-residents.

Similar cases in Michigan and who It also plays on the tension the legislation creates between states’ interests in protecting domestic businesses and the dormant trade clause of the Constitution. The clause prohibits states from interfering with interstate commerce in ways that favor their own economies over those of other states.

Nearly every state with a social justice program for residents is subject to similar lawsuits, but it is ultimately up to Congress to ensure that federal rationing is balanced.

Why is Variscite suing New York State?

It’s hard to say. The company claims that its social justice programs violate owner Kenneth Jay’s constitutional rights. But there are a lot of subtexts to consider.

Gay also owns Peridot Tree, a California company He is currently suing the city of Sacramento on similar terms. LGBT people can really feel discriminated against by programs that favor state residents over non-residents. But many question the real motives of the plaintiff.

What can Variscite gain from license delays?

It is unclear. But speculation was rife. It has been suggested that a special CAURD license could be in the plaintiff’s cards – not as a reward, but as a “shut up and walk away” settlement. Other, more sinister motives have also been put forward without evidence or proof.

Regardless of the plaintiff’s motive, federal law gives some credence to their claim. However, the federal judge in Byredo v. Sacramento in California chose to refrain from the matter Thursday (November 17), citing the federal illegality of cannabis. Jay will now bring this case to the Ninth Circuit Federal Court for further ruling.

Ultimately, ending the federal ban on cannabis is the only way to prevent lawsuits like this from becoming a national trend. Otherwise, the Idle trade clauseAs applied here, it can be used to block social justice programs in almost every legal state.

It is difficult to determine Plaintiff Variscite/Peridot’s true motives for many reasons. There are a lot of side effects to consider. Other cannabis companies, wasted resources on application and legal fees, and potential negative responses from affected companies all make this a high-stakes, low-reward case for an outsider. last week.

What’s next in Variscite v. New York?

An attorney representing several applicants advised that affected licenses in Brooklyn, the Finger Lakers and other areas could be suspended for three to four months.

Despite the lawsuit, the New York Office of Cannabis Management said it plans to move forward with the CAURD licensing program, calling the Variscite lawsuit a minor setback.

OCM plans to award its first class CAURD license holders on Monday, November 21, at a board meeting open to the public.

OCM’s official statement about the case to Leafly November 10 states:

“We do not comment on pending litigation. The Office of Cannabis Management is committed to the Marijuana Regulatory and Tax Act’s goals of including those impacted by state enforcement of cannabis prohibition in the market we are building, and we are also committed to fully operating the New York cannabis supply chain.”

Freeman Clopot, Director of Communications at OCM

On Friday (November 18), CAURD applicants who applied in one of the affected areas shared an email they received from OCM, informing them of how the condition affected their application.

The email read: “The New York State Office of Cannabis Administration has received your application and is in the process of evaluating and reviewing it for deficiencies.”

The email from OCM continues, “Due to a recent court decision, the New York State Cannabis Control Board (the Board) is unable to issue any licenses in the following five geographic licensing regions: Brooklyn, Central New York, Finger Lakes, Mid-Hudson, and Western New York. You have selected one of these five regions as your regional first choice.Because the office has received more applications than the number of licenses available for each of the 14 regions, only the applicant’s regional first choice will be considered.As such, the board will not be able to issue licenses In these areas, until the judicial proceeding is resolved, or the plaintiff withdraws his complaint.”

“However, the office will continue to review deficiencies and will communicate with applicants to resolve deficiencies in their applications. The office will continue to communicate with applicants as soon as updates are available.”

New York Office of Cannabis Administration


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