A Southern California attorney who is asking a federal court to again freeze New York’s cannabis licensing admitted in a new court filing on Valentine’s Day that the two social equity entrepreneurs on whose behalf he sued were only recruited to the effort mere weeks before he filed the lawsuit against the Empire State.
Beverly Hills-based lawyer Jeffrey Jensen filed suit against New York cannabis regulators on Dec. 18 on behalf of two business entities – Variscite NY Four and Variscite NY Five – which are both 51% owned by Los Angeles County residents Dante Kinsey and Justin Palmore, respectively.
But Jensen owns the other 49% of both entities, he noted in the filings, meaning he’s got an obvious stake in the outcome of the litigation beyond regular attorneys’ fees.
Shopping for social equity
Jensen only recruited Kinsey and Palmore to be owners of the businesses in the first week-and-a-half of December 2023, after forming the two entities on Nov. 30, according to court records filed Feb. 14.
The suit is asking for an injunction to halt all new cannabis retail permits from being issued unless the Variscite companies are included in an “extra priority” pool for retailers that will be supposedly fast-tracked. The “extra priority” advantage, Jensen said, is reserved for applicants with New York cannabis convictions, which he said he only learned of in October after adult-use cannabis rules were finalized.
“The current majority owners of Variscite Four and Variscite Five were not the originally intended majority owners,” Jensen wrote in an affidavit, stating vaguely that the original owners were “unable to proceed.”
When the original plan fell through, Jensen contacted Palmore on Dec. 4 and Kinsey on Dec. 11 to see if they’d be interested in entering the New York cannabis industry. It’s not clear how Jensen found either Palmore or Kinsey, but both wrote in affidavits that they had been unaware of the possible business opportunity in New York until Jensen got in touch with them.
Both Palmore and Kinsey signed on by Dec. 16 to be majority owners of the two companies, and Jensen sued the New York Office of Cannabis Management and the Cannabis Control Board just 12 days later, according to court records.
Jensen new partners Variscite
The Variscite plaintiffs lost the first legal round in New York earlier this month when the federal judge in the case denied a request for a temporary restraining order and preliminary injunction against the state, but the case is still pending. Two more hearings are scheduled for next month.
Variscite NY One win
Jensen has already won one retail license from New York state for a third company, Variscite NY One, in a settlement last year with the state over a parallel lawsuit which targeted residency requirements he claimed were unconstitutional.
That lawsuit, filed in October 2022, froze retail cannabis licensing in five regions of New York for months until the settlement was reached in May 2023. The settlement deal guaranteed Jensen and Variscite NY One, of which he owns 49%, a marijuana retail permit in New York, according to court filings.
Jensen has filed similar lawsuits with other social equity business partners in California and Washington State, though he lost in Washington last month. The California cases are awaiting a ruling from the Ninth Circuit Court of Appeals.
Jensen further argued in a separate court filing on Valentine’s Day that the court should ignore a request by the New York attorney general for the case to be dismissed, and again asserted that the U.S. Dormant Commerce Clause applies to the modern marijuana industry. He cited a First Circuit Court decision in 2022 from Maine, which ruled that the Commerce Clause does apply, and noted that’s to date the highest court ruling issued in the nation on the unsettled legal question.
If the judge were to rule that the Commerce Clause does apply, Jensen argued, that would overrule “unconstitutional New York residency preferences” and level the playing field for companies such as the Variscite entities.
Variscite dismissal request on V Day
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