Litigants who challenged NY cannabis social equity sue again

The out-of-state litigants whose lawsuit challenging New York state’s cannabis social equity laws contributed to the infamously botched rollout of adult-use sales in the market have filed another claim against the state.

This time, according to court documents, the former owners of Variscite – the Michigan company awarded a marijuana retail permit as part of a key settlement with the Office of Cannabis Management – are seeking $375,000 from the state after a proximity dispute hurt the sale value of their license, according to a claim filed Jan. 31.

Records show the claim was filed by Jeffrey Jensen, a white Los Angeles attorney who’s been at the center of several challenges to marijuana social equity laws across the country.

Jensen did not immediately respond to an MJBizDaily request for comment.

The Office of Cannabis Management (OCM) declined to comment.

Regulators denied proposed location, suit claims

According to the claim, New York awarded Variscite a general marijuana retail permit as part of a landmark settlement reached in 2023.

Later litigation also delayed the rollout of the New York recreational marijuana market, a situation that Gov. Kathy Hochul branded a “disaster.”

But Variscite’s November 2022 claim disrupted licensing in key areas across the state, including Brooklyn.

Rather than using the license sell cannabis in New York, Variscite’s owners “reached an agreement” to sell shares in the permit to a third party for $1.025 million, according to the lawsuit.

However, according to the lawsuit, the OCM rejected Variscite’s proposed location in Mount Vernon because the proposed store would have been within 2,000 feet of another planned retailer, according to the claim.

The claim alleges the OCM didn’t open an online portal in time for Variscite to register the location and secure proximity protection.

That halted the sale and led Variscite to dump its shares for $650,000 on Jan. 24, according to the claim.

The buyers were not identified.

Rejection led to ‘reduced amount’ for sale, Variscite alleges

According to the claim, Thomas Donahue, the OCM’s acting general counsel, did not respond to Variscite’s attempt to contact in December to inform him that the company “would lose the sale” if the agency didn’t approve the location.

“Because OCM denied Purchaser’s proposed location, Purchaser would not complete the transaction for $1.025 million,” the claim notes, in part.

“Thus, OCM harmed Variscite’s owners by causing them to sell the shares of Variscite for a reduced amount.”

According to the claim, Variscite’s owners include Jensen as well as Alex Cherney, a Michigan real estate agent, and Kenneth Gay, a Battle Creek, Michigan man, who is also involved in other lawsuits challenging social equity across the United States.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.