New Lawsuit Challenges Cannabis Third Party Marketing Ban

ALBANY, N.Y. — A new lawsuit in Albany County state Supreme Court lays out a timeline of what it calls New York’s disastrous rollout of cannabis regulations, including litigation that has effectively stalled the industry’s growth.

Amid all this, the Cannabis Control Board approved new regulations last week that appear to address concerns that resulted in a court-ordered pause on the approval of new licenses or opening of new dispensaries.

“They are now going to be expanding the application program for anybody within New York State and outside of New York State who wants to enter from a retail dispensary perspective, cultivation, distribution, processing initiative, etc,” Tully Rinckey, deputy cannabis practice chair Ryan McCall said.

However, the cannabis law expert said one rule that remains in place in the finalized regulations is a third party marketing ban. That ban is what led primary petitiioner, Leafly, to sue the cannabis regulators.

“Leafly is a platformer that effectively allows anybody who’s interested with cannabis, not just in New York state but throughout the country to be able to look at reviews, sometimes be directed to place orders, you’re able to purchase advertising from the individual dispensary, distributor, etc.,” McCall explained.

He said while the ban has been in place since the beginning of New York’s cannabis industry, the past roughly two years have been somewhat of a pilot program. That’s why he believes Leafly, which compares itself to third party platforms in other industries, for instance in OpenTable for restaurants, is taking action now.

“Now what we’re seeing with finalization, what is going to be the  roadmap for New York state cannabis moving forward, you’re now having issues where, hey we can’t go to third party marketing firms, we can’t go to any type of third party advertising, third party distributing. It somewhat pigeonholes a lot of businesses that cold be involved within New York State commerce to market it and grow cannabis,” McCall said.

The tentative date to implement the new regulations is Oct. 4. McCall believes there’s a chance all sides could sort out this legal battle before that happens.

“I think ultimately it could put another road block yet again with what we’re seeing however this is going to be a lawsuit that I think will settle relatively quickly and the reason I say that, I’m not necessarily speaking for the company however it looks to me that there is going to be a happy medium that could be reached here,” he said.

He said if there’s not a compromise, he doesn’t expect the lawsuit to affect licensing going forward but it could have an impact on marketing rules.

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