Netherlands’ adult use experiment enters next phase • Cannabis companies fire back in DOJ suit • NY gov. calls for review of licensing • & more …

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As we reported in this newsletter in December, two localities in the Netherlands kicked off the first phase of the country’s adult use pilot project. 

The aim of the project is to allow some growers in select municipalities to grow cannabis, legally, and then supply that cannabis to the country’s existing coffee shops. The coffee shops have long been “tolerated,” but not legal, and cultivation has never been legal.

The Dutch government announced on Friday that, starting in June, the next phase of the project will begin, and will allow for the growers in the municipalities of Breda and Tilburg to sell to coffee shops. Then, for three months, while the newly legal supply catches up with demand, the coffee shops can sell both “regulated” and “tolerated” cannabis. Starting in September, these coffee shops must only source from the legal growers.

Back in January, the U.S. Department of Justice sought to dismiss a suit in which several cannabis companies (represented by prominent lawyer David Boies) argue that federal cannabis laws should not apply in states with legal cannabis. The DOJ replied in its motion to dismiss that the companies’ arguments were “unpersuasive,” as Cannabis Wire reported at the time.

The DOJ specifically argued that because “no fundamental right exists to distribute, possess, or use marijuana,” the CSA does not violate plaintiffs’ “right to substantive due process.” And, because the plaintiffs don’t “show a substantial risk of future enforcement,” they “lack standing to challenge the CSA.”

Now, the companies, which include a few cannabis operators in Massachusetts and multistate operator Verano, are seeking to have the DOJ’s January motion dismissed. 

They push back in the latest complaint, filed late last week, arguing that they “have shown injury under two independent theories: economic harms and the threat of prosecution.” Further, they argue that they have “shown causation,” meaning that the DOJ’s “conduct” has led to these “injuries.” And, finally, these “injuries” could be remedied if they were granted “the relief sought in the complaint.”

Beyond that, they argue, as they did in the initial complaint, that Gonzales v. Raich no longer holds. 

“Two decades ago, the Supreme Court held in Gonzales v. Raich,” the plaintiff’s write, “that Congress could regulate intrastate marijuana only where such regulation is necessary and proper to serve an interstate regulatory goal. In 2005, Congress’s regulation of marijuana passed that test: Congress was intent on eradicating interstate marijuana, and the factual circumstances that existed in 2005 supported the Government’s position that banning intrastate marijuana was necessary for achieving that goal.” 

“But,” they continue, “that legislative and factual landscape no longer exists. It has changed in the intervening 18 years in ways that even the most ardent advocates of marijuana reform in 2005 would never have imagined possible.” 

The molasses-slow launch of the adult use cannabis industry has prompted Gov. Kathy Hochul to ask the Office of General Services to conduct a review of the Office of Cannabis Management. 

The review, announced on Monday, is to “identify opportunities for improvement and begin implementation of a strategic plan for the long-term success of the legal cannabis rollout.” 

Multiple sources have told Cannabis Wire that Hochul is fuming about the rollout. One reason is that while she’s previously blamed former Gov. Andrew Cuomo for the slow rollout, because he signed the law, the implementation has fully taken place under her leadership. In other words, when push comes to shove, she’s responsible. 

So what’s next? 

OGS Commissioner Jeanette Moy will “embed” within OCM for at least a 30-day “sprint to assess the agency’s organization.” 

From there, the goals are: 

• “Top-down review of organizational structure, processes, and systems with a focus on improving OCM license processing times and application-to-opening timeframes for new cannabis retailers and businesses.

• Develop key performance metrics and an executive-level licensing dashboard to provide the Executive Chamber with a timely, accurate, and comprehensive picture of licensing activity for legal retailers.

• Identify and implement changes to policy, procedure, and regulation (within the bounds of the MRTA) to streamline the licensing process and simplify application and review for prospective licensees.

• Develop three-month and six-month action plans with organizational change initiatives, milestones, and actions to continue improving agency functions while developing a world-class licensing and regulatory agency for New York States’ cannabis industry.”

The OGS assessment of OCM’s work could go on beyond the 30-day mark, and “the potential for external consulting may be considered to support a second, longer-duration phase of the effort.”

+ More in NY: Licensing discrimination lawsuit is re-filed.

In January, we reported that one of the several new licensing lawsuits against cannabis regulators came from a plaintiff who felt that the approach to equity left him out “as a white man.”

Late last week, that suit was re-filed in federal court, and now the plaintiff, Valencia Ag, owned by brothers William and Emmet Purcell, is represented pro bono by the Pacific Legal Foundation, which describes itself as “the oldest and most successful public interest legal organization that fights for limited government, property rights & individual rights.”

The new legal backing might put some momentum into the suit.

Bloomberg Law described the conservative organization in January as having “remarkable success” at the Supreme Court, with a “17-2 record,” and a strategy of finding “sympathetic plaintiffs to secure conservative victories.”