By Brendan J. Lyons | timesunion.com
ALBANY — The New York Medical Cannabis Industry Association filed a lawsuit Wednesday seeking a court order compelling state regulators to “fulfill their legal responsibility to thwart the influx of illicit cannabis product … and to identify and sanction the companies responsible for the illegal ‘inversion’ of out-of-state cannabis products into New York.”

The lawsuit was filed in state Supreme Court against the Office of Cannabis Management and Jessica Garcia, chairwoman of the state Cannabis Control Board.

It alleges the board and Office of Cannabis Management have disregarded their statutory mandates, “and abdicated their responsibility to create a safe, regulated and insular intrastate adult-use cannabis market.”

The lawsuit contends the proliferation of illicit cannabis in New York is not only the result of unlicensed marijuana shops. It notes that illicit cannabis has also infiltrated the licensed cannabis market, and has “placed adult-use consumers and medical patients at risk, threatened the financial viability and reputation of the regulated adult-use market, bolstered the illicit cannabis market and robbed communities impacted by the War on Drugs of critical tax revenue.”

The botched rollout of New York’s retail cannabis industry has been plagued with regulatory and administrative missteps, poor decision-making, a lack of communication and transparency, and a bustling illicit marijuana network that has undermined the ability of those who invested in the marketplace to do well, according to court records, interviews with industry stakeholders and testimony at public hearings.

The medical association’s lawsuit notes that “less than 30 percent of cannabis businesses are profitable.” It also alleges that “most cannabis businesses struggle to remain viable in the hope that the federal government’s re-categorization of cannabis from Schedule I to Schedule III will lower their tax burden and enable them to realize modest profits.”

The lawsuit also contends the state has unnecessarily delayed implementation of a “seed-to-sale” tracking system that would sharply inhibit the ability of “out-of-state actors” to get their illicit products onto the shelves of licensed retail stores.

It’s not the Medical Cannabis Industry Association’s first legal battle with New York’s regulators.

Eleven months ago, the association filed a lawsuit challenging the constitutionality of what it alleged was a punitive $20 million fee that’s required for medical cannabis operators to enter the retail marketplace.

That lawsuit argued that regulations requiring registered medical marijuana companies to make four payments of $5 million as a condition of entering the retail market were so “onerous” that they essentially constituted a “regulatory taking” of their business — and at a time when the number of individuals with valid marijuana prescriptions in New York has been plummeting.

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