Court Ruling Casts Doubt on New York’s Cannabis Licensing Process

A federal appeals court on Tuesday ruled that certain criteria used to award licenses to open cannabis businesses in New York are very likely unconstitutional.

The state prioritizes people who were convicted of marijuana offenses under its past laws, and those who have lived in neighborhoods where marijuana arrests were highest.

But in a 2-1 decision, judges on the Court of Appeals for the Second Circuit in Manhattan said that the criteria, which excluded people with federal or out-of-state marijuana convictions from receiving priority, appeared to violate constitutional doctrine barring states from favoring their own residents over people from other states.

The decision may lead to New York having to revise the order in which it considers thousands of pending applications for business licenses. At a public meeting in July, regulators said there were nearly 4,700 applications awaiting consideration, more than half of them for recreational dispensaries.

But the biggest impact, legal observers said, is likely to be in other states that use similar criteria. The plaintiffs have filed lawsuits in a handful of states, including California, Washington, Maryland and Rhode Island.

This is a developing story and will be updated.