Medical marijuana association sues New York over $20M licensing fee

ALBANY, N.Y. (NEXSTAR) — A medical marijuana trade group sued New York's Cannabis Control Board (CCB) on December 4, claiming that a $20 million licensing fee imposed by regulators on weed retailers violates the state Constitution and the 2021 Marijuana Regulation and Taxation Act (MRTA). According to the lawsuit, the fee represents an unconstitutional tax that "offends" the equal protection doctrine and breaks the separation of powers and takings clauses.

The plaintiffs, the New York Medical Cannabis Industry Association (NYMCIA), said that the CCB overstepped its authority and unfairly penalized medical marijuana businesses, jeopardizing their survival to favor newer recreational companies. They want the court to declare the fee unconstitutional, block it from being enforced, and refund any payments already made. You can check out the full text of the suit at the bottom of this story.

The lawsuit against the CCB and the Office of Cannabis Management (OCM) challenged a requirement that medical marijuana companies pay $5 million upfront, along with three more $5 million installments by 2033. The suit claimed that the language of the MRTA only authorizes one-time payments, meant to target underserved communities with social equity programs like treatment initiatives, research programs, and public education campaigns.

The plaintiffs said that the $20 million fee violated the separation of powers because only the Legislature has the power to impose a tax. And NYMCIA said that CCB set that tax arbitrarily: “The administrative record is devoid of a cost assessment."

They blamed patients losing access, financial woes, and dispensary closures on the policy. Forsaking any genuine equity goals, analysis of actual costs, or desire to reduce illegal sales, the CCB assessed the $20 million based on abstract market projections, according to the lawsuit.

The MRTA created a dual licensing system for recreational and medical marijuana and shifted oversight from the Department of Health to the CCB. These medical marijuana operators had invested in facilities and supply chains under New York's earlier Compassionate Care Act, according to the lawsuit, and expected to expand.

NYMCIA represents nine of those registered organizations, established retailers in the medical marijuana sector, which often operate across state lines. That's how they figured that the CCB defied equal protections—through a kind of default discrimination against any out-of-state retailers. Instead of prioritizing medical sales, which could have stabilized the market, regulators delayed them.

Only four of the nine registered operators in NYMCIA made their first $5 million payment. Others opted for wholesale licenses, limiting them to supplying retailers instead of selling directly to patients. As a result, the suit argues, 11 medical dispensaries shut down since 2022 while the black market boomed.

The lawsuit calculated that the fee outpaces revenue until a business earns $200 million. The plaintiffs argued that it drives down the value of medical marijuana businesses, which amounts to taking property without compensation. This represents an unjust property seizure, they said, in violation of the state Constitution's takings clause.

If the case proceeds, the ruling will reshape the state's approach to regulating the budding industry, with particular impact on medical patients. Take a look at the complaint below:

Related video from October: OCM issues new marijuana implementation report