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N.Y. cannabis firm claims white male owners faced racial and gender discrimination

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New York’s Office of Cannabis Management is facing another setback in its ongoing rollout of the retail cannabis market after an Onondaga County company filed a lawsuit in U.S. District Court last week arguing its operators have been discriminated against for being white males.

The company, Valencia Ag based in Jamestown, applied for a cannabis retail license but alleges that state regulators are violating the equal protection clause by discriminating against them based on race and gender. Valencia Ag is owned by “males of light pigmentation who might best be described as caucasian or white men,” the lawsuit states.

New York’s cannabis law specifies that the licensing process should “award (50) percent of adult-use cannabis licenses to social and economic equity applicants,”including prioritizing “individuals from communities disproportionately impacted by the enforcement of cannabis prohibition,” minority-owned businesses, women-owned businesses, distressed farmers and service-disabled veterans.

The plaintiffs said that they were ranked 2,042 in a hierarchy of about 2,200 operationally ready applicants in a list published by state cannabis regulators on Jan. 12. The lawsuit said that the list had been culled from 6,800 applicants who had space ready to open a licensed cannabis business and were ready — upon receipt of a license.

Valencia Ag had signed a lease for $2,000 a month plus utilities and insurance, the lawsuit states, in order to be considered for a cannabis license.

The Office of Cannabis Management’s list of applicants determined an order of reviewing of applications, with more than 1,800 applicants who qualified as “social and economic equity” candidates listed as higher priority than Valencia Ag, their lawsuit claims.

The lawsuit claims that Valencia Ag “might never have their applications reviewed or their licenses granted,” with the delay being due to their status as white men.

Valencia Ag claims that their low priority in the licensing process is a violation of federal civil rights.

The company’s complaint adds that the Cannabis Control Board board is made up of all members that would count as minorities or women, with no white men represented, underscoring that the panel was appointed due to their race and gender. Valencia Ag claims that the board members are charged with implementing policies that “favor and give preference to their own race and gender.”

Their lawsuit joins others that have alleged the licensing program is unconstitutional.

Another setback unfolded last year when state Supreme Court Justice Kevin R. Bryant temporarily blocked the office from issuing new cannabis licenses after four veterans sued, claiming that prioritization of those with prior marijuana convictions violated the constitutional rights of other “social equity” applicants, including minority- and women-owned businesses, as well as disabled military veterans.

That injunction has since been lifted and licensing is continuing.

A federal judge in Albany issued another temporary injunction in November 2022 blocking the Office of Cannabis Management from issuing retail licenses in five regions of the state due to a lawsuit filed by a company whose application to operate a marijuana store failed to qualify because one of its owners — a Michigan resident — lacked “a significant New York state presence.”

The company that filed that lawsuit, Variscite NY One, is owned by two men, Jeffrey Jensen and Kenneth Gay, who is a resident of Michigan. Gay owns a construction company there and has a past marijuana conviction in that state. In court filings, their attorney said they submitted a retail license application which failed to qualify because neither the company nor Gay, who has a 51 percent ownership of the company, had met the application’s definition of “a significant New York state presence.”

The rules implemented by New York sought to ensure that the first recreational storefronts were run by individuals with ties to the state, requiring proof of resident status, assets in New York or local property ownership. In addition, eligible applicants or their family members had to be convicted of a marijuana-related offense “in New York state” — out-of-state convictions did not qualify.

The state later settled its litigation with Variscite but then resumed its controversial licensing program at an “expanded and accelerated rate” despite the constitutional issues that had been raised, according to a ruling by Bryant, the state Supreme Court justice who later shut the rollout down.

Valencia Ag’s lawsuit compares the cannabis law’s goals to those of recently rejected affirmative action admission practices at colleges and universities. The lawsuit claims that the state Office of Cannabis Management “intentionally discriminated against plaintiff and other white men.”

The law’s goals to prioritize social and economic equity applicants are intended to remedy racial inequities and “to incentivize participation in this new industry for individuals disproportionally impacted by cannabis prohibition,” according to the office's website.

New York legalized marijuana more than two years ago and has struggled to establish a bustling retail market, in part, because of provisions in the 2021 law that placed restrictions on licensing requirements to achieve what state officials have said are important social equity objectives.



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