Lawsuit Challenges New York’s $200 Million Cannabis Equity Fund

The Cannabis Impact Prevention Coalition has filed a federal lawsuit against New York and the state Office of Cannabis Management, challenging the legality of a $200 million Cannabis Social Equity Fund aimed at facilitating the opening of more marijuana retail shops.

This lawsuit is the coalition’s second legal challenge to New York’s legalized marijuana market. The initial lawsuit, filed in June, sought to overturn the 2021 law legalizing marijuana, comparing the state’s claims about the industry to tobacco companies’ fraudulent claims, reports the Times Union.

In the recent case filed in U.S. District Court in Albany, the coalition likens New York’s marijuana shops to drug trafficking operations, highlighting that the Dormitory Authority of the State of New York (DASNY) is overseeing the equity fund and the financing and siting of retail shops that “remain subject to federal prosecution for violating the federal Controlled Substance Act.”

The lawsuit asserts that the state is unlawfully facilitating marijuana trafficking operations, which conflicts with federal controlled substances law. It also argues that the state’s taxation of marijuana sales constitutes proceeds from marijuana trafficking, and federal statutes outlaw financial transactions related to drug trafficking.

The Cannabis Impact Prevention Coalition’s legal actions are part of a wave of litigation challenging New York’s legalized marijuana marketplace, including issues related to licensing and “social equity” funding systems prioritizing individuals with past marijuana convictions.