New York City has convinced U.S. Judge J. Paul Oetken of dismissing a case brought by Moon Rocket Inc.
New York legalized adult-use cannabis after decriminalizing cannabis. However, the delay of the launch of the program allowed unlicensed operators to flourish. Licensed stores complained that unlicensed retailers were a threat to their business once they opened. They didn’t have to adhere to strict rules regarding signage or heavy taxes. Unlicensed shops sold untested, cheaper products and displayed bright signs for cannabis promotion stores, reducing the sales at licensed stores.
State responded by giving more authority to cannabis regulators in order to close these shops. This allowed the City Sherriff to close any stores without a valid license. Five days were allowed to the shuttered owners before they could address the actions of the New York City Office of Administrative Trials and Hearings.
OATH heard from 27 of the businesses involved in the case to question their closures. In 17 of the cases, OATH’s hearing officer acknowledged the summons and imposed fines. They also recommended the continuation of the sealing order. According to the court’s opinion, in five cases the OATH hearing officers upheld summons and recommended lifting the sealing orders due to inadequate service of sealing orders or because the Sheriff failed to establish that an immediate threat existed. In four of the cases, the OATH Hearing Officer dismissed the summons due to defective service. However, he recommended that the seal order be left in place. “In one instance, an OATH officer dismissed the summons, recommended lifting of the sealing order but the sheriff kept it in place.”
He acknowledged that by closing down the shops, the businesses were unable to generate any revenue. He also said, however, that the city’s desire to protect public safety and health by controlling the illegal cannabis sales was equally compelling.
The judge also noted that businesses were given the chance to have an hearing. This led to the lifting of some operator’s sealing orders. The operators refused to back down, insisting that by refusing removal of seals, the Sheriff was in disagreement with certain OATH rulings. They also claimed the Sheriff had too much authority. The Judge said in the Opinion that operators who did not like the judgement could appeal it under Article 78. This process allowed two operators to have their decisions overturned.
The Judge determined that unlicensed operators had the right to be heard, and to contest the results of the hearing if the operator disagreed with the outcome. He accepted the city’s request for dismissal of the case.
2314000-2314384-https-ecf-nysd-uscourts-gov-doc1-127137193928