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A settlement clears the way for Finger Lakes cannabis, but weed entrepreneurs see a hollow victory

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After months of litigation, weed is expected to soon be sold legally in Rochester and elsewhere in the region, after a lawsuit that delayed the issuing of licenses for dispensaries was settled Tuesday.

The state was sued last year by Variscite NY One, a cannabis company owned by Michigan resident Kenneth Gay, who argued New York's retail license selection process unconstitutionally favors New Yorkers over out-of-state residents. Gay contended he met every standard to receive a license in New York aside from residency. He also filed a similar lawsuit against the city of Los Angeles.

As a result, a federal judge in November issued a temporary injunction against the licenses being handed out in five areas around New York, including Brooklyn. But an appellate court in March narrowed the injunction to the Finger Lakes area, making it the only region in the state where legal cannabis was stymied.

Critics have blamed the state for what they call an overly cumbersome process designed to ensure the first round of licenses go to people who had criminal convictions related to marijuana in their pasts or had relatives with weed-related run-ins with the law.

Office of Cannabis Management general counsel Linda Baldwin told the board Tuesday that Variscite has agreed to settle. She said the agreement would allow licenses to be issued in the Finger Lakes and would provide a license for the plaintiff in the future.

The board approved a resolution to move ahead with a settlement, which Baldwin expected to be filed in court later this week.

State regulators said they would provide no additional details of the settlement until it is finalized.

State Sen. Jeremy Cooney touted the settlement as a win for the cannabis industry and as removing a major obstacle to a regulated cannabis marketplace.

"Public safety cannot be achieved in our state until all New Yorkers — including those of us in the Finger Lakes Region — can walk into a legal dispensary and purchase cannabis products that have been tracked and tested," said Cooney, who is heads the Senate's Cannabis Committee.

But participants in the local cannabis industry cast the development as bittersweet, and said there remain barriers to entry.

Grant "SkribeDaGod" Atkins, a Rochester-based cannabis entrepreneur, said the slow roll-out of regulations and licenses by the state are far more of a hurdle than the lawsuit ever was.

Despite most regions of the state being cleared to open dispensaries for months, only 12 are operating in New York, and only five outside New York City.

"It's one hurdle that's been removed, but I'm not sure it's as much of an obstacle as it might have appeared to be," Atkins said. "You can see in the regions that were not under that lawsuit umbrella, they still don't have the level of licenses being granted that would actually create the businesses, entities, and members across the supply-chain that could supply the demand in the marketplace."

Steve VanDeWalle, a Rochester-based cannabis entrepreneur and podcast host, held a similar sentiment. He characterized as the cannabis industry as sluggish and blamed the state.

"Here's the thing, the Variscite hold up could have been way worse, but we're so bogged down with the (Office of Cannabis Management) rollout, it really hasn't had much effect," VanDeWalle said. "...It provides us a better grasp moving forward, but it really hasn't affected us."

Calls seeking comment were made to Variscite's attorneys, but were not immediately returned.

Gino Fanelli covers City Hall. He joined the staff as a reporter in 2019 by way of the Rochester Business Journal, and formerly served as a watchdog reporter for Gannett in Maryland and a stringer for the Associated Press.
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