New York City launches new medical marijuana company

Hudson Health Extracts will become New York’s newest organization registered in the medical marijuana industry following a court ruling based on a lawsuit the company filed after the state denied it a license.

In a Dec. 20 decision, Albany County Supreme Court Judge Patrick McGrath ordered the New York City Department of Health, which previously oversaw the state’s medical cannabis program, to issue permits to Hudson Health Extracts to grow, manufacture and sell marijuana for the medical market. Judge McGrath also ordered the Cannabis Management Authority, which currently oversees the medical market, to work with the company to approve four dispensaries.

Representatives for Hudson Health Extracts declined to comment and forwarded the court’s decision to NY Cannabis Insider. An OCM spokesperson told NY Cannabis Insider that the agency is looking into how it will fulfill its obligations under the settlement.

“We are reviewing a court order approving a settlement agreement with the New York State Department of Health and will work with Hudson Health Extracts on the next steps,” OCM said in an emailed statement.

HHE filed a lawsuit in February 2021 alleging that the New York City Department of Health unfairly denied the company registration to grow, produce and sell medical cannabis in 2015. Compassionate Care Act, HHE had to score high enough to win registration.

After the Department of Health initially denied registration, it took officials 2.5 years to hold an administrative hearing on the matter, according to the HHE complaint. When HHE received its hearing, it proved that the Department of Health erroneously found that the company had a negative balance when it actually had over $18 million, the company said.

Instead of correcting the error, the hearing officer doubled down on the erroneous evaluation of the application and denied registration to HHE.

Following the Department of Health’s final decision in 2020, HHE filed Section 78 proceedings, a type of lawsuit that allows plaintiffs to challenge State Department decisions, and Judge McGrath ruled in HHE’s favor late last month.

“The DOH hereby grants registration to HHE for the cultivation, production, and sale of medical marijuana, as if it were issued under the CCA, since the top 10 applicants were issued,” the decision reads.

HHE’s status as a new RO is a big deal in New York City, where for years there were only 10 companies registered to grow, manufacture and sell marijuana in the state’s medical market. Nine of these 10 companies are large companies with a national presence.

While the HHE registration is the result of a lawsuit and not a regulatory decision, it appears to be consistent with OCM’s stated intent to expand the government’s medical cannabis program. In the agency’s first annual report, OCM said it spent part of the past year working to expand access to medical marijuana, including streamlining patient certification, expanding the types of healthcare providers that can enroll someone as a patient, and adding to the list of qualifying conditions.

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Tim Mitchell, an advocate for expanding and improving New York City’s medical cannabis program, welcomed the news of HHE’s new status. Mitchell said the state should add more ROs to its list, but hasn’t seen much interest from regulators.

“I think that’s fantastic because at this point and in the near future it doesn’t seem like there’s much motivation to take on additional medical components in MRTA,” Mitchell said.

Mitchell said he was particularly excited about the fact that HHE is a local company, unlike other New York ROs that include nine MSOs and Etain, which was acquired by RIV Capital last year.

“I would be optimistic if this could mean there could be more responses to consumer queries or needs; whereas with a multi-state operator, sometimes the decision is multi-state, where people in New York don’t have a lot of voting power,” he said.

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