NY Court Ruling Overturns Restrictive Cannabis Advertising Regulations

In a significant win for cannabis businesses and platforms operating in New York, a state supreme court judge has struck down the state’s prohibitive rules around third-party cannabis advertising and marketing. The ruling by Judge Kevin R. Bryant deems several key regulations by the Office of Cannabis Management (OCM) as “arbitrary, capricious, and unconstitutional.”

The lawsuit, brought forth by Leafly Holdings, a dispensary, and a consumer, challenged the OCM’s effective ban on third-party cannabis marketing platforms and restrictive advertising policies. Specific regulations invalidated include prohibitions on retailers paying for listings on cannabis product aggregators like Leafly, as well as mandates around listing all licensees and pricing information.

“It’s critically important that licensed retailers have equal access to advertising and marketing tools to succeed in a competitive landscape,” Leafly stated, applauding the court’s decision to overturn rules that would have barred the company’s operations in New York.

While Judge Bryant’s initial ruling appeared to invalidate New York’s entire adult-use cannabis program regulations, the court quickly clarified that the decision only applies to the marketing and advertising provisions.

This clarification allayed concerns about potential market disruption, as the sweeping interpretation had some lawmakers and industry watchers fearing regulatory chaos in the state’s struggling legal marijuana market. Only around two dozen dispensaries have opened amid persistent supply issues and unlicensed operators undercutting progress.

With the revised ruling securely focused on advertising regulations, the decision paves the way for cannabis brands and services in New York to leverage third-party platforms for consumer outreach, education, and marketing – tools deemed essential in an increasingly competitive market landscape.

The OCM, while reviewing its legal options, had defended the now-overturned rules as necessary safeguards against irresponsible advertising and unfair market advantages for larger operators. However, the court found the agency failed to provide sufficient justification.

As New York’s cannabis market continues its tumultuous rollout, this ruling represents a significant milestone for businesses seeking a more open and equitable digital marketing environment within the regulated industry.