Regulators in New York said Tuesday that the state had reached a settlement with a Michigan cannabis business, clearing the way for the Empire State’s regulated marijuana industry to be fully implemented, specifically including the Finger Lakes region.

The five-member panel of the New York Cannabis Control Board unanimously approved the decision to settle with the Michigan-based Variscite NY One, Inc., which sued the state last year after being denied a cannabis retail license. 

The ensuing lawsuit resulted in a court-ordered injunction in November that precluded the state of New York from issuing licenses to several regions, including Brooklyn.

In March, the same federal judge lifted parts of the injunction, which enabled the state to award 99 new licenses, including to Brooklyn, Mid-Hudson and other regions where licenses had been temporarily banned. But the injunction remained in effect in the Finger Lakes, which is currently the only region in New York where licenses have not been allocated.

But the vote on Tuesday by the Cannabis Control Board could change that. 

The lawsuit was filed last year by Kenneth Gay, the owner of Variscite who has been previously convicted of a pot-related offense in Michigan. 

New York announced last year that the first round of cannabis retail licenses would be awarded to individuals previously convicted of a marijuana offense or a family member of someone who had. 

But Gay’s application was denied because his conviction occurred in Michigan, and New York regulators require license-holders to have “significant” ties to the Empire State.

Tuesday’s decision by the Cannabis Control Board must now be approved by a federal judge. If it is, it would officially end the “court injunction preventing the state from granting [Conditional Adult-Use Retail Dispensary] licenses to businesses in the Finger Lakes region,” and “would also guarantee an adult-use license for the plaintiff once general licensing begins,” according to Syracuse.com.

“We felt that we had strong ground on this; however, it is impeding CAURD licensees in that region,” said Cannabis Control Board member Reuben McDaniel, as quoted by Syracuse.com. “I’m very pleased that we’re considering this today … not because I think that this lawsuit has any merit, but our CAURD licensees need to be in the Finger Lakes, as well, getting to work.”

The outlet noted that most of the “details of the settlement will remain confidential until it is filed and approved in court later this week.” 

The adult-use cannabis market launched in New York late last year with the opening of a store in Manhattan’s East Village neighborhood. 

Other shops followed in Manhattan, and in March, the first legal cannabis retailer opened in the borough of Queens. (It was also the first woman-owned dispensary in the state.) 

After the federal judge lifted part of the injunction earlier this year, the Cannabis Control Board announced in April that it had “granted at least one [Conditional Adult-Use Retail Dispensary, or “CAURD”] provisional license in each region other than the Finger Lakes, which remains blocked by the injunction.”

The board explained at the time that the 99 new licenses it had awarded “included four for Western New York, one for Central New York, five for Mid-Hudson, and three for Brooklyn, marking the first provisional licenses to be issued in these regions following last week’s modification of a court injunction that had prevented the Board from issuing them.”

“We are proud of today’s approval of 99 CAURD provisional licenses, marking a vast expansion of the Seeding Opportunity Initiative as we continue to build an equitable market that offsets harms caused by cannabis prohibition and its disproportionate enforcement,” Tremaine Wright, the chair of the Cannabis Control Board, said in a statement at the time.

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The city of Los Angeles’ Department of Cannabis Regulation last week announced that it had “successfully conducted the retail application lottery, also known as the Phase 3 Retail Round 2 Lottery,” during which it “selected 100 verified Social Equity Individual Applicants (SEIAs) for the opportunity to apply for a cannabis retail license in the City of Los Angeles.”

“The Lottery was the culmination of nine months of planning, including a verification process that allowed individuals to request verification as a Social Equity Individual Applicant (SEIA). More than 1,000 individuals requested verification and over 500 SEIAs met the criteria to participate and timely registered to be entered in the Lottery. Additional information on the SEIA criteria and process can be found here,” the city said in a statement on Thursday.

“The SEIA verification criteria align with the mission of the Social Equity Program (SEP) to promote equitable ownership and employment opportunities in the cannabis industry. The SEP is an integral part of the Department of Cannabis Regulation and provides economic opportunities for those most affected by the War on Drugs,” the statement continued.

That application process faced a legal challenge, when a Michigan man named Kenneth Gay sued the city last month. 

Per MJBizDaily, Gay “filed the California lawsuit a month after filing a similar suit in New York, where a federal judge ruled that state regulators couldn’t issue dozens of adult-use marijuana retail licenses until the legal action was resolved,” after it was determined that he “didn’t meet the criteria for eligibility under L.A. law, which requires an applicant to have a ‘prior California cannabis arrest or conviction’ and either be low income or live in an area identified as disproportionately affected by policing.”

In his lawsuit, Gay asserted that “he satisfied all three requirements, ‘except that the relevant events occurred in Michigan rather than California,’” and that his suit “also contended that because Los Angeles ‘enacted laws and regulations that provide a preference to California residents over out-of-state residents for the Lottery,’ the city’s social equity program violates the U.S. Constitution’s dormant commerce clause.”

The city’s Department of Cannabis Regulation explains that the latest lottery, which took place on December 8, was part of a “triple-blind, random selection process.”

“A ‘blind’ selection process means that the entity which selects the applicants does not know their identity. A ‘triple-blind’ process means that no one involved in the process, including FTI, DCR, and other City departments, knew the identity of who was selected until after the selection process had been completed and the data from each party was reconciled,” the regulators explained in a press release.

The city said that it “contracted with a third-party global business advisory firm called FTI Consulting Inc. (FTI) to administer the selection process.”

Social equity provisions have become a hallmark of cannabis reform efforts in states and cities across the country, with elected officials and policymakers cognizant of the importance of remedying previous harms of the War on Drugs.

California, which legalized recreational pot back in 2016, is no exception.

In September, the state’s Democratic governor, Gavin Newsom, announced that he “signed several measures to strengthen California’s cannabis laws, expand the legal cannabis market and redress the harms of cannabis prohibition,” per a release from his office at the time.

In addition to signing the measures, Newsom called “on legislators and other policymakers to redouble efforts to address and eliminate these barriers.”

“For too many Californians, the promise of cannabis legalization remains out of reach,” Newsom said at the time. “These measures build on the important strides our state has made toward this goal, but much work remains to build an equitable, safe and sustainable legal cannabis industry. I look forward to partnering with the Legislature and policymakers to fully realize cannabis legalization in communities across California.”

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