New York Medical Cannabis Industry Challenges The State’s System: $20M Fee Per Operator At Stake

The New York Medical Cannabis Industry Association (NYMCIA) has filed a lawsuit against the New York Cannabis Control Board (CCB) and the Office of Cannabis Management (OCM) over a $20 million fee for adult-use cannabis licenses.

The NYMCIA is asking for the fees to be declared unconstitutional and refund any fees already paid, reported Green Market Report.

The lawsuit centers on the argument that the fee is punitive and disproportionately affects the original cannabis operators (Registered Organizations or ROs) who helped launch the state’s medical marijuana program in 2014.

Under NY’s legalization plan, Marijuana Regulation and Taxation Act (MRTA), a one-time fee was meant to fund social equity programs, but the NYMCIA argues the OCM and CCB set the fee at $20 million without consideration.

The association claims the fee is designed to financially burden the ROs and exclude them from the adult-use market. According to them, the financial impact of the fee has been severe and has prohibited many operators from switching to the adult-use market.

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Only four out of the ten original ROs have been able to make the first $5 million installment payment to transition to adult-use licenses.

The rest are left with wholesale-only licenses, limiting their market opportunities. This has also led to closures and reduced hours at medical dispensaries, negatively affecting patients.

The lawsuit points to statements from former OCM leaders, such as Chief of Staff Axel Bernabe, who allegedly acknowledged that the intention was to keep ROs out of the adult-use market.

The NYMCIA is demanding that the court invalidate the fee and refund any payments made. If successful, the case could have broad implications for the future of cannabis regulation in New York and other states navigating similar issues.

COVER: Photo by Lukas Kloeppel via Pexels