In a breathtaking decision filed yesterday in New York Supreme Court, the Honorable Kevin R. Bryant issued a decision and order that has struck down virtually all of New York’s adult-use cannabis industry regulations as unlawful and void and arbitrary and capricious, finding that the regulations violate free speech and are unconstitutionally vague. However, less than twenty-four hours later, Judge Bryant handed down an amended decision and order, limiting the scope of the decision to certain regulations related to third-party marketing platforms – saving the balance of the regulations from this ongoing legal challenge.
In September 2023, Leafly Holdings, Inc. and Stage One Cannabis, LLC filed an Article 78 petition in New York Supreme Court - Albany County, challenging regulations that ban third-party advertising and marketing services in NY's adult-use cannabis industry. The plaintiffs have claimed that OCM illegally and unfairly targeted “third-party platforms” such as Leafly with regulations that are unconstitutional because they impermissibly restrict their right to free speech. The regulations at issue prohibit anyone from advertising, promoting or marketing their products any other third-party platforms, including Leafly.
Sections 123.10(g)(21) and 124.5(a) (Third Party Marketing Ban); 124.1(b)(5)(ii) (Pricing Ban); 123.10(g)(23) (Third Party Order Ban); 124.1(b)(2) (Third Party All Licensee Listing Mandate); 124.1(c)(1)-(2) (Third Party Distributor Listing Mandate) have been deemed unlawful and void as arbitrary and capricious.
While it’s still difficult to predict what happens next with certainty, the Notice of Entry was filed on April 4th, so OCM has thirty (30) days to file a notice of appeal, for which the deadline is May 3rd. If and when OCM files a notice of appeal, a stay will likely become effective, meaning Judge Bryant’s order may be stayed from enforcement until the appeal has been decided. Foley Hoag’s cannabis industry practice group will provide updates as more information becomes available.
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