where "plaintiffs have no chance of succeeding on the merits of their claims ... Supreme Court erred in granting the preliminary injunction and denying ... cross motion to dismiss."
How later courts described this case
- where "plaintiffs have no chance of succeeding on the merits of their claims ... Supreme Court erred in granting the preliminary injunction and denying ... cross motion to dismiss."
Written by the judges who cited it.
The opinion
MNG N.Y. Holdings, LLC v New York State Cannabis
Control Bd.
2025 NY Slip Op 31145(U)
April 7, 2025
Supreme Court, New York County
Docket Number: Index No. 160287/2024
Judge: Arthur F. Engoron
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
Op 30001(U), are republished from various New York
State and local government sources, including the New
York State Unified Court System's eCourts Service.
This opinion is uncorrected and not selected for official
publication.
INDEX NO. 160287/2024
NYSCEF DOC. NO. 54 RECEIVED NYSCEF: 04/07/2025
SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
PRESENT: HON. ARTHUR F. ENGORON PART 37
Justice
- - - ·-------------------------------------------------------------X INDEX NO. 160287/2024
MNG NEW YORK HOLDINGS, LLC D/B/A CBD KRATOM,
MOTION DATE 11/05/2024
Petitioner,
MOTION SEQ. NO. 001
- V -
NEW YORK STATE CANNABIS CONTROL BOARD, NEW
YORK STATE OFFICE OF CANNABIS MANAGEMENT,
TREMAINE WRIGHT, IN HER OFFICIAL CAPACITY AS
CHAIRWOMAN OF THE NEW YORK STATE CANNABIS DECISION + ORDER ON
CONTROL BOARD, FELICIA REID, IN HER OFFICIAL
MOTION
CAPACITY AS INTERIM EXECUTIVE DIRECTOR OF THE
NEW YORK STATE OFFICE OF CANNABIS
MANAGEMENT,
Respondents.
----------------------------------------------------------------------- ---X
The following e-filed documents, listed by NYSCEF document number (Motion 001) 1, 2, 3, 4, 5, 6, 7, 8,
9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37,
38, 39,40, 41,42,43,44,45,46, 47,48, 49, 50, 51,
were read on this motion for ARTICLE 78 (BODY OR OFFICER) RELIEF
Upon the foregoing documents, for the reasons stated hereinbelow and after oral argument on
December 13, 2024, the preliminary injunction is denied, the temporary restraining order is
vacated, and respondent's cross-motion to dismiss is granted.
Background
Petitioner, MNG New York Holdings, LLC d/b/a CBD Kratom, a New York State-licensed
hemp retailer and distributor, seeks to remove certain Notices of Violation ("NOV") signs from
its storefronts pending final adjudications. Petitioner argues, inter alia, that respondents acted in
excess of their authority in relying upon "general" New York Cannabis Law provisions to search
petitioner's premises, and that respondent violated petitioners due process rights by posting the
NOVs prior to a full adjudication. NYSCEF Doc. No. 1.
Statutory Framework
On March 31, 2021, New York State passed the Marihuana Regulation and Taxation Act; to
"regulate, control, and tax marihuana" through a regulatory regime of requirements for licensing,
labelling, and testing of medical cannabis, adult-use cannabis, cannabinoid hemp and hemp
1
extracts. Cannabis Law § 2. Article 2 of the Cannabis Law establishes two independent entities
1
Marijuana and hemp both come from the same plant, cannabis saliva, but contain different compounds and have
different effects on users. Marijuana contains tetrahydrocannabinol (THC), which when consumed binds to the CBI
receptors of the brain, which may create a feeling of relaxation and euphoria, and in sufficient amounts, cause
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to enforce the law, the Cannabis Control Board ("CCB") and the Office of Cannabis
Management ("OCM"); Article 3 of the Cannabis Law regulates medical cannabis; Article 4
regulates adult-use cannabis; Article 5 regulates cannabinoid hemp and hemp extract; and Article
6 contains general provisions.
As part of the "General Prohibitions and Restrictions" laid out in Article 6 at Cannabis Law§
125, the legislature decreed that:
I. No person shall cultivate, process, distribute for sale or sell at
wholesale or retail or deliver to consumers any cannabis, cannabis
product, medical cannabis or cannabinoid hemp or hemp extract
product, or any product marketed or labeled as such, within the
state without obtaining the appropriate registration, license, or
permit therefor required by this chapter unless otherwise
authorized by law. ...
1-b. Any activity conducted in violation of subdivision one or one-
a of this section presents a danger to public health, safety, and
welfare.
The legislature authorized OCM "To conduct regulatory inspections of any registered, licensed
or permitted place of business, where medical cannabis, adu.lt-use cannabis, cannabinoid hemp,
hemp extract products, or any products marketed or labeled as such, are cultivated, processed,
stored, distributed or sold." Cannabis Law § 11 (5)
In addition, in a section titled "action for unlawful business practices relating to cannabis," the
legislature authorized OCM to
1. order any person who is unlawfully cultivating, processing,
distributing or selling cannabis, cannabis product, cannabinoid
hemp or hemp extract product, or any product marketed or labeled
as such in this state without obtaining the appropriate registration,
license, or permit therefor, or engaging in an indirect retail sale to
cease such prohibited conduct;
2. seize any cannabis, cannabis product, cannabinoid hemp or
hemp extract product, or any product marketed or labeled as such,
found in the possession of a person engaged in the conduct
described in subdivision one of this section and their place of
business, including a vehicle used for such business;
intoxication. New York terms cannabis with high levels of THC "adult-use cannabis." Hemp, on the other hand,
contain~ cannabidiol (CBD), which purportedly offers medicinal benefits, including anti-inflammatory and analgesic
properties. Hemp products allow the consumption of CBD by application or ingestion of various tinctures, oils,
topicals, pills, capsules and foods or beverages. Hemp does contain THC, but in a "concentration of not more than
0.3 percent on a dry weight basis," and so hemp products are generally not intoxicating.
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Cannabis Law § 13 8-a.
Nine NYCRR § 133.25(a), also authorizes OCM to
without notice, conduct site visits, inspections or investigations of:
any person ... cultivating, processing, distributing, selling or
offering for sale cannabis, cannabis product, cannabinoid hemp or
cannabinoid hemp extract product, or any product marketed or
labeled as such in this state, or engaging in an indirect retail sale,
without obtaining the appropriate registration, license, or permit. ..
In the event that OCM issues a Notice of Violation after an inspection, it is further authorized,
pursuant to 9 NYCRR § 133.25(d)(6), to "affix one or more warning notice at or near the front
door or other opening to such location where customers enter from the street advising the public
that the business is ordered to stop the unlawful activity and of the public health and safety
concerns relating to illicit cannabis."
The Instant Searches and Signs
On July 17, 2024, an OCM Inspector and "a group of heavily armed individuals wearing police
jackets and bulletproof vests" raided, without a warrant, petitioner's store located at 161 Sixth
Avenue, New York, New York, which has a Hemp Retail License from OCM.
On October 15, 2024, an OCM Inspector and "a group of heavily armed individuals wearing
police jackets and bulletproof vests" raided, without a warrant, petitioner's store located at 794
Lexington Avenue, New York, New York, which has a Hemp Retail License from OCM.
According to petitioner, at each raid the OCM Inspectors did not test any of the seized products
and refused to examine petitioner's certificates of analysis showing the chemical contents of the
products. Immediately following each raid, OCM affixed large signs - the NOV s - on each
storefront which read, in large red lettering:
WARNING: THIS BUSINESS IS ORDERED TO STOP
ILLEGAL ACTIVITY ... ILLICIT CANNABIS SEIZED ...
ILLICIT CANNABIS PRODUCTS HA VE NOT BEEN TESTED
OR APPROVED BY OCM AND CAN POSE A THREAT TO
PUBLIC HEAL TH AND SAFETY. THE UNLICENSED SALE
OF CANNABIS AND CANNABIS PRODUCTS IS STRICTLY
PROHIBITED.
On November 5, 2024, petitioner commenced this special proceeding. NYSCEF Doc. No. 1.
And on November 7, 2024, after a brief oral argument on MS Teams, this Court signed a
temporary restraining order permitting petitioner to remove the subject NOV s. NYSCEF Doc.
No. 10.
Discussion
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A preliminary injunction may be granted "when the party seeking such relief demonstrates: (1) a
likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the
provisional relief is withheld; and (3) a balance of equities tipping in the moving party's favor."
Doe v Axelrod, 73 NY2d 748, 750 (1988).
Petitioner's main argument is, essentially, that because it is a licensed hemp purveyor2 it was,
pursuant to Cannabis Law § 134, not acting unlawfully at the time of its raids and therefore
Cannabis Law§ 138-a does not apply to it, because that statute prohibits the sale of marijuana
and hemp by unlicensed stores.
However, neither the Cannabis Law's legislative purpose ("to regulate, control, and tax
marihuana") nor its structure supports petitioner's argument. Generally, Article 6 has multiple
sections that relate to licensees like petitioner. See e.g., Cannabis Law§§ 125(2) (prohibiting
any "licensee" from selling "cannabis or cannabinoid hemp or hemp extract" for resale); 126(1)
("license[s]" are not transferable); 128(2) (no "license" may be used as collateral); 133(1) (any
"license" may be "revoked, cancelled, suspended and/or subjected to the imposition of a civil
penalty for cause"); 133(6) (CCB may "revoke, cancel, or suspend" any "license" where holder
thereof "refused to permit a regulatory inspection by [CCB]"). And, specifically,§ 138-a clearly
and broadly references OCM's authority over "any person." See Super Smoke N Save LLC v
New York State Cannabis Control Bd., 226 NYS3d 847, 857 (Sup Ct, Albany County 2025)
(argument "that the powers granted to OCM under Cannabis Law§ 138-a apply only to
unlicensed operators ... rings hollow and is contrary to the statutory language which applies to
any person.").
Here, because respondent acted within the scope of its authority, pursuant to Cannabis Law §
138-a and 9 NYCRR § 133.25(d)(6), when it searched petitioner's stores and posted the subject
NOV s, petitioner cannot demonstrate a likelihood of ultimate success on the merits; nor can it
show that the balance of the equities tips in its favor. Further, as petitioner has not exhausted its
administrative remedies and is still entitled to post-exhaustion Article 78 review, it cannot
demonstrate irreparable injury if the provisional relief (which has already temporarily been
granted since November) is withheld. Therefore, the motion for a preliminary injunction should
be denied.
While compelling Fourth Amendment arguments have been made against searches similar to the
one at bar, those arguments are not before this Court. See Super Smoke (finding searches of
licensed hemp stores by OCM unreasonable and likely a violation of petitioner's Fourth
Amendment rights).
As plaintiffs are unlikely to succeed on the merits, respondent's cross motion to dismiss should
be granted. Cubas v Martinez, 33 AD3d 96, 102 (1st Dept 2006), affd as mod, 8 NY3d 611
(2007) (where "plaintiffs have no chance of succeeding on the merits of their claims ... Supreme
Court erred in granting the preliminary injunction and denying ... cross motion to dismiss.").
2
Petitioner acknowledges that as a cannabinoid hemp retailer it is subject to administrative searches, pursuant to 9
NYCRR § 114.l l(f).
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This Court has considered petitioner's other arguments and finds them to be unavailing and/or
non-dispositive.
Conclusion
Therefore, petitioner's motion for a preliminary injunction is denied, the temporary restraining
order that this Court issue is hereby vacated, respondent's cross-motion to dismi is granted, and
the Clerk is hereby directed to dispose of the petition accordingly.
4/7/2025
DATE ARTHUR F. ENGORON, J.S.C.
~
CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION
GRANTED □ DENIED GRANTED IN PART 0 OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER
CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE
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