New York marijuana regulators have secured two court victories upholding the state’s authority to require individual product tracking and enforce marijuana laws, with judges rejecting challenges brought by a licensed processor and a retail business accused of selling illicit products.
The rulings, issued September 22 and September 25 by Albany County Supreme Court, were announced today by the New York State Office of Cannabis Management (OCM). Both decisions favored the agency and the Cannabis Control Board, reinforcing their authority over the state’s regulated marijuana industry.
In Veterans Holdings, Inc. v. New York State Office of Cannabis Management, a licensed marijuana processor challenged the state’s requirement that products be tracked individually through the Metrc seed-to-sale system. The company argued that regulators could not impose per-unit tracking requirements without first adopting a new regulation.
The court rejected that argument, finding that existing state law supported OCM’s authority to require the tracking system. The decision also found that regulators had a rational basis for requiring individual product tracking to protect public health and maintain the integrity of the regulated supply chain. The court noted that OCM had provided licensed processors with 30,000 tracking identifiers at no cost to help businesses transition to the system.
The second case, Stonedhenge Smoke-N-Grow LLC v. New York State Cannabis Control Board, involved a June 2024 inspection of a retail store in Baldwinsville. During the inspection, OCM officials, working with the New York State Department of Taxation and Finance and State Police, seized approximately $7,000 worth of products and issued a violation alleging illegal marijuana sales.
The business challenged the enforcement action in court before completing the agency’s administrative hearing process. The court dismissed the lawsuit as premature, ruling that the business must first pursue its available administrative remedies before seeking judicial review. The court also dismissed the company’s constitutional claims.
“These decisions affirm the importance of ensuring that, as regulators, we have complete visibility into the regulated market and can effectively carry out our enforcement responsibilities”, said OCM Executive Director John Kagia.
OCM General Counsel Barbara Graves-Poller said the rulings provided clarity regarding the agency’s regulatory powers and reinforced the requirement that administrative proceedings be completed before enforcement disputes reach the courts.
The decisions come as New York continues implementing its statewide Metrc tracking system, which allows regulators to monitor marijuana products throughout cultivation, processing, distribution and retail sales.
