Key Points

  • The Appellate Division, Third Department, unanimously reversed a judgment upholding the Office of Cannabis Management's voiding of Griffon Green LLC's adult-use retail dispensary license application.
  • The court held that voiding the application over a co-owner's 80-day-late disclosure form, without considering her explanation for the delay, was arbitrary, capricious, irrational and an abuse of discretion.
  • The court found no prejudice to the state because the late form sought no new information and only confirmed facts the co-owner had already attested to under penalty of perjury.
  • The court held that 9 NYCRR 120.14(a), which provides that an application may be deemed void for failure to respond to agency requests, is permissive and does not require voiding, unlike the rule barring consideration of applications still deficient after a cure period.
  • The application was reinstated and remitted to the Office of Cannabis Management for further proceedings.

A New York appeals court on Thursday reinstated a company's application for an adult-use retail cannabis dispensary license, ruling that state regulators acted arbitrarily when they threw out the application because one of its two owners returned a confirmation form 80 days late.

A five-justice panel of the Appellate Division, Third Department, unanimously reversed an Albany County Supreme Court judgment that had upheld the Office of Cannabis Management's decision to deem Griffon Green LLC's application void. Justice Mackey wrote for the court, joined by Presiding Justice Garry and Justices Aarons, Pritzker and McShan. The panel annulled the agency's determination and sent the application back to the office for further proceedings.

The decision turns on the wording of the state's cannabis licensing regulations. The court held that a rule providing that an application "may be deemed void" when an applicant misses a deadline to answer the agency's requests gives the office discretion rather than a mandate. Because the office voided Griffon Green's application "without considering Lippman's explanation for the delay," the court concluded, its decision could not stand.

According to the opinion, Griffon Green applied in November 2023 and listed two "[t]rue [p]arties of [i]nterest," the individuals whose identifying, financial and personal information the regulations require an applicant to disclose: Michael Shah and Bonni Lippman. Lippman, who held 51% of the company, signed the application as its manager and "[r]esponsible [p]arty," attesting under penalty of perjury that its contents were "true and accurate."

In July 2024, the office notified the company by email that each true party of interest had to submit an additional electronic disclosure form through the application portal within 30 days or the application would be void. Shah responded on time. Lippman did not submit her form until late October 2024, 80 days past the deadline, and the office then told the company that its application was "deemed void."

Lippman said in a sworn statement that she had suffered a "personal hardship" involving her child during that period and that the delay was inadvertent. Lippman described the request as a "check the box" form asking for confirmation that the information already in the application was "true and correct." Shah said in an affidavit that the form sought no new information. The form itself was not in the record, but the court noted that the state did not dispute its contents.

Griffon Green challenged the voiding in a CPLR article 78 proceeding against the office and the Cannabis Control Board. The company sought to annul the determination and to compel the agencies to consider and act on its application. Supreme Court Justice David Gandin upheld the determination and dismissed the case in a judgment entered March 26, 2025.

On appeal, the panel applied the arbitrary-and-capricious standard, under which, quoting its own precedent, an agency's action fails when "it is taken without sound basis in reason or regard to the facts." The court also acknowledged that an agency's reading of its own rules receives deference, but only "if that interpretation does not contradict the plain language of the regulations and is not irrational or unreasonable."

The panel found no harm to the state from the late filing. "Respondents have shown no prejudice from Lippman's 2½-month delay in responding to OCM's request, inasmuch as no new information was requested and Lippman had already attested to the accuracy of the information in the application upon its submission," Justice Mackey wrote.

Weighing "the dramatic prejudice to petitioner, the lack of prejudice to respondents and the merely redundant nature of the disclosure requested from Lippman," the court held that voiding the application without considering her explanation was "arbitrary, capricious, irrational and an abuse of discretion." Justice Mackey added: "To hold the contrary would serve only to needlessly exalt form over substance."

The state had argued that the regulations required the office to void the application. The panel rejected that reading, drawing a line between two provisions. One rule states that applications that remain "still deficient" after a 30-day cure period following a deficiency notice "will not be considered." A separate rule addresses an applicant's failure to respond to the office's requests for information and provides only that the application "may be deemed void."

The court read the two together under the principle, drawn from Court of Appeals precedent, that regulatory language within a larger scheme must be taken "in context and in a manner that harmonizes the related provisions and renders them compatible." The panel also pointed to a parallel rule stating that the Cannabis Control Board "may deny an application for a license" when an applicant fails to submit requested information, adding emphasis to the word "may."

The ruling did not award Griffon Green a license. The court reversed "on the law, without costs," reinstated the application and remitted the matter to the Office of Cannabis Management "for further proceedings not inconsistent with this Court's decision." It said the parties' remaining arguments had been considered and found unavailing.

Lawyers for Griffon Green included William F. Savino of Woods Oviatt Gilman LLP in Buffalo. The state agencies were represented by the office of New York Attorney General Letitia James.

The case was on the court's September 9, 2026, calendar. Griffon Green's application now returns to the Office of Cannabis Management for further review consistent with the panel's decision. The ruling, reported as 2026 NY Slip Op 06188, remains subject to revision before publication in the Official Reports.