New York medical marijuana firms sue over adult-use licensing fee

A group representing licensed medical marijuana operators in New York is suing the state over a $20 million “special licensing fee” that the lawsuit calls “punitive and unconstitutional.”

The suit is the latest in a string of legal challenges that have contributed to a shaky rollout of New York’s recreational cannabis industry.

The lawsuit, filed by the New York Medical Cannabis Industry Association (NYMCIA) in the State Supreme Court in Albany, alleges that the Office of Cannabis Management and Cannabis Control Board “overstepped their authority, subverted the intention of the state Legislature in the 2021 Marihuana Regulation And Taxation Act (MRTA) and assessed a punitive tax in the guise of a special licensing fee,” according to a news release.

The MRTA, signed into law in March 2021, was intended to provide licensing opportunities and support to social equity applicants and microbusinesses.

The lawsuit seeks to invalidate the “special licensing fee” because it:

Defendants named in the suit are:

• The New York State Office of Cannabis Management (OCM).
• The New York State Cannabis Control Board (CCB).
• CCB Chair Tremaine Wright.
• OCM Executive Deputy Director and Acting Executive Director Felicia Reid.

The NYMCIA alleges in its suit that a regulation requiring MMJ operators seeking to enter the state’s adult-use market to pay $20 million in four payments is “so onerous that it has decimated their enterprise value, amounting to a ‘regulatory taking’” of their business.

The suit contends that, under the MRTA, the CCB was charged with assessing “a one-time special licensing fee” to allow MMJ operators “to also serve adult-use consumers. The MRTA further provided that the ‘one-time’ fee must be ‘an amount to adequately fund social and economic equity and incubator assistance.’”

The suit alleges that the fee “is a magnitude higher than any other state in the nation has charged for a cannabis license of any kind.”