The Office of Cannabis Management is being sued by New York-licensed hemp companies in federal court. In a lawsuit filed earlier this month in the Southern District of New York, 10 hemp companies claimed that raids aimed at cracking down on the illicit marijuana market and the enforcement of revised hemp regulations had catastrophically affected their businesses.
The crackdown came after the Cannabis Control Board approved a resolution to reduce the proliferation of products that contained cannabinoids derived from hemp and create a safe environment that would allow the state’s budding legal market to flourish.
The defendants include the Office of Cannabis Management; chair of the Cannabis Control Board, Tremaine Wright; the state’s Cannabis Control Board; and Chris Alexander, executive Director of the Office of Cannabis Management.
In the suit, the plaintiffs claim that the companies’ constitutional rights are being violated. The companies are seeking compensation as well as an order that will invalidate the state’s recently implemented regulations on hemp.
Parties involved in the suit include beverage manufacturers, retailers and Cycling Frog, a company that successfully sued New York over revised hemp regulations released mid-last year. These rules were invalidated in November, with the judge noting that the state hadn’t successfully proven that hemp products harmed or misled consumers. This decision prompted the state to issue new regulations, which are the focus of this recent lawsuit.
In the lawsuit, the plaintiffs state that the invalidated regulations imposed a compulsory minimum ratio of CBD to THC in hemp-based products, which greatly limited the products available for market and pushes consumers to the illicit market. The regulations also limited such products to 1 mg per serving and no more than 10 mg of THC per package. Additionally, these regulations forbade retailers from selling any product with more than 0.5 mg of THC to any individual below 21 years of age.
Joshua Bauchner, the plaintiffs’ attorney, stated that the litigants were willing, ready and able to work with the state of New York to adopt rational rules that would protect against hemp misuse. He also noted that he wouldn’t stand by and allow the state to disrupt his plaintiffs’ businesses in a misdirected effort to close unlicensed marijuana stores, engage in warrantless seizures and searches, and violate the constitutional rights of his plaintiffs, who were operating in full compliance with both federal and state law.
Bauchner is also the chair of Mandelbaum Barrett’s Cannabis, Hemp and Psychedelics Practice Group.
Multi-state cannabis companies such as Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) are likely hoping that the issues in question are resolved expeditiously so that the people of New York State aren’t unwitting victims of the disagreements between the hemp industry and state authorities.
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