ALBANY, N.Y. — A federal judge has rejected a challenge to New York state’s licensing program to sell legal marijuana, a system that two California applicants say unconstitutionally discriminates against out-of-state residents.
Friday’s ruling by Albany Judge Anne M. Nardacci could prompt New York to issue hundreds of licenses in a state where most marijuana is sold by unlicensed businesses.
Nardacci said the public interest in allowing properly licensed companies to take over the New York market outweighs the concerns raised by the lawsuit.
She said the main purpose of the dormant commerce clause that plaintiffs argued should give them access to the New York market does not apply to the federally illegal cannabis trade. The clause is intended to prevent states from taking protectionist measures to restrict interstate commerce in the absence of congressional regulations.
Two companies controlled by Los Angeles residents had sought a temporary restraining order and preliminary injunction in their mid-December lawsuit. They wanted to delay the state’s permitting process while the lawsuit continued.
Nardacci rejected the requests in a written ruling, saying an injunction would allow illegal store operators, who now control the market, to continue dominating it as the rollout of secure, regulated licenses to sell cannabis products would be delayed.
Lawyers for both sides did not immediately respond to requests for comment on Sunday.
Attorneys for the state had argued that more than 1,000 stores were expected to be licensed this year and argued that the state’s application process allows out-of-state residents to prove they live in an area disproportionately affected by the cannabis prohibition.
A program launched in October was designed so that many of the first New York licenses would go to people with prior drug convictions, so that people harmed by the war on drugs would have a chance to succeed before competitors rushed in.
These measures were expected to increase the number of legal pharmacies in a market now dominated by black market sellers who simply open shops without licenses.
Critics blame New York’s slow retail growth in part on bureaucratic issues, such as delays in setting up a $200 million social equity fund to help applicants open stores. The rollout has also been hampered by lawsuits on behalf of people and companies excluded from the first wave of retail licensing.