New York Cannabis Regulations Are Not CSA-Preempted Absent Mandated Federal-Law Violations and in Light of Federal Enforcement Tolerance

Matter of Cannabis Impact Prevention Coalition, LLC v Hochul, 2026 NY Slip Op 01573 (3d Dept Mar. 19, 2026)

1. Introduction

This case arises from New York’s post-legalization regulatory framework under the Marihuana Regulation and Taxation Act (MRTA), which created the Cannabis Law and established the Cannabis Control Board (CCB) and Office of Cannabis Management (OCM). Petitioners—a coalition of individuals and organizations—challenged OCM regulations governing (i) medical marihuana (9 NYCRR part 113), (ii) adult-use packaging and labeling (9 NYCRR part 128), and (iii) adult-use marketing and advertising (9 NYCRR part 129). They claimed the regulations are preempted by the federal Controlled Substances Act (CSA), which continues (as written) to prohibit marijuana manufacture, distribution, and possession in most circumstances.

The central issue was conflict preemption: whether the challenged New York regulations create a “positive conflict” with the CSA—either because compliance with both regimes is impossible, or because New York’s rules obstruct Congress’s purposes under the CSA. Supreme Court dismissed for failure to state a claim; petitioners appealed.

2. Summary of the Opinion

3. Analysis

A. Precedents Cited

The court’s preemption analysis is built from federal supremacy principles, New York’s articulation of preemption doctrine, and several “as-applied”/practical-conflict decisions.

• Gonzales v Raich, 545 US 1 (2005)
  Cited for the Supremacy Clause baseline (“if there is any conflict between federal and state law, federal law shall prevail”) and for the CSA’s objectives and scheduling structure. The Third Department uses Raich as both the doctrinal entry point and the substantive description of Congress’s aims: combating drug abuse and preventing diversion into illicit channels.
• Sutton 58 Assoc. LLC v Pilevsky, 36 NY3d 297 (2020), cert dismissed ___ US ___, 142 S Ct 53 (2021)
  Supplies New York’s taxonomy of preemption: express, field, and conflict. This frames why the court focuses on conflict preemption, given CSA § 903’s explicit “positive conflict” savings clause.
• Matter of Quigley v Village of E. Aurora, 193 AD3d 207 (3d Dept 2021), lv denied 37 NY3d 908 (2021)
  Provides the operative conflict-preemption tests (impossibility and obstacle) and two critical constraints: (i) “hypothetical or potential” conflicts are insufficient; and (ii) preemption requires more than generalized tension. The court repeatedly relies on Quigley to reject petitioners’ asserted “impossibility” scenarios as speculative.
• New York State Telecom. Assoc., Inc. v James, 101 F4th 135 (2d Cir 2024), cert denied ___ US ___, 145 S Ct 984 (2024)
  Used for the “heavy burden” on obstacle-preemption challengers, especially where the state acts within traditional police powers. The cannabis regulatory scheme is treated as core public health and safety regulation, strengthening the presumption against preemption.
• Scaletta v Michels Power, Inc., 236 AD3d 1 (3d Dept 2025), appeal dismissed 43 NY3d 981 (2025)
  Reinforces the same high bar for proving conflict preemption; cited alongside New York State Telecom. to emphasize that “tension” is not enough.
• Wyeth v Levine, 555 US 555 (2009)
  Supports the idea that preemption is “particularly weak” where Congress knows state law operates in the field yet tolerates the tension. The opinion later analogizes this to Congress’s repeated appropriations restrictions and the broader federal posture toward state marijuana regimes.
• Jones v Rath Packing Co., 430 US 519 (1977)
  Anchors a key methodological move: obstacle preemption considers state and federal laws “as they are interpreted and applied, not merely as they are written.” This becomes pivotal to the court’s reliance on the federal government’s practical tolerance and enforcement priorities concerning marihuana.
• English v General Elec. Co., 496 US 72 (1990)
  Cited for the principle that congressional intent is central to preemption analysis, setting up the court’s discussion of CSA objectives and how they interact with New York’s regulatory choices.
• Matter of Buenos Hill Inc. v Saratoga Springs Planning Bd., 240 AD3d 990 (3d Dept 2025), appeal dismissed 44 NY3d 1015 (2025)
  Supplies both (i) a concise statement of federal illegality (marijuana remains Schedule I “meaning that… it is unlawful, under federal law…”) and (ii) the observation that federal policy has “come to tolerate” state-legal use, including through federal funding prohibitions. The Third Department uses Buenos Hill as a close-in-department precedent addressing marijuana’s legal dualism.
• Botteon v Borough of Highland Park, 478 NJ Super 452, 315 A3d 816 (NJ App Div 2024)
  Persuasive authority supporting the conclusion that state cannabis schemes do not create impossibility where they do not compel CSA violations. Also cited for the idea that the CSA’s practical enforcement posture weakens obstacle-preemption arguments.
• In Re State Question No. 807, Initiative Petition No. 423, 2020 OK 57, 468 P3d 383 (OK Sup Ct 2020)
  Persuasive authority that similarly rejects preemption based on speculative impossibility when state law merely permits/regulates rather than commands prohibited conduct.
• Hager v M & K Constr., 246 NJ 1, 247 A3d 864 (2021)
  Cited for the description that federal branches have “muddied the waters” between state marijuana laws and federal enforcement—supporting the Third Department’s “as applied” assessment of federal objectives and enforcement reality.
• BUDR Holdings 5, LLC v Zoning Bd. of City of Stamford, 2025 WL 2778781, 2025 Conn Super LEXIS 2602 (Sept. 22, 2025, No. FST-CV-24-6067639-S)
  Persuasive authority invoked with other state decisions reflecting judicial recognition of federal-state coexistence in marijuana regulation.
• Standing Akimbo, LLC v United States, ___ US ___, 141 S Ct 2236 (2021 Thomas, J., concurring)
  Used to characterize the federal government’s “piecemeal” departure from strict CSA application to marihuana since Raich. Although a concurrence, it is deployed to illustrate the perceived erosion of a formerly rigid federal objective as a practical matter.
• Grand S. Point, LLC v Bassett, 230 AD3d 49 (3d Dept 2024), appeal dismissed 42 NY3d 1025 (2024), lv denied 43 NY3d 907 (2025)
  Drives the procedural modification: when a court reaches the merits of a declaratory judgment claim, it must issue a declaration, not merely dismiss.

B. Legal Reasoning

The court’s reasoning turns on a structured application of CSA § 903 and conflict-preemption doctrine:

1. Why only conflict preemption was in play.
   The CSA “explicitly leaves room for the state law to operate” unless there is a “positive conflict” (21 USC § 903). That clause is effectively an instruction to avoid broad express/field-preemption readings and instead ask whether state law cannot “consistently stand together” with federal law in practice.
2. Impossibility: permission/regulation is not compulsion.
   Petitioners argued that because the CSA prohibits marijuana manufacture/distribution/possession, state regulations governing labeling, advertising, and medical marijuana operations necessarily conflict. The court rejected this, emphasizing a doctrinal distinction: New York’s MRTA framework and these regulations regulate a state-legal market but do not require anyone to engage in federally unlawful conduct. Thus, the alleged conflicts were “hypothetical or potential” rather than actual impossibilities under Matter of Quigley v Village of E. Aurora.
3. Obstacle: MRTA’s express noninterference clause and continued federal enforceability.
   MRTA declares it is not intended “to require” conduct violating federal law, “to exempt anyone” from federal requirements, or to “pose any obstacle” to federal enforcement (Cannabis Law § 2). The court treated this as probative that the state scheme is designed to coexist with federal law, not to frustrate it. Critically, the court noted that federal sanctions remain available, and state sanctions can also apply in certain circumstances, including for noncompliance with New York’s own regulations.
4. Obstacle “as applied”: federal toleration informs the practical objective.
   Relying on Jones v Rath Packing Co., the court assessed the federal-state relationship “as interpreted and applied.” It underscored: (i) widespread state legalization; (ii) congressional appropriations provisions historically limiting the use of federal funds to interfere with state medical marijuana implementation (as summarized in the opinion’s Footnote 3); and (iii) broader federal enforcement focus on illicit networks. On that record, the court concluded that the challenged regulations do not obstruct the accomplishment of Congress’s purposes in the manner required for obstacle preemption.
5. Doctrinal framing: a “fading federal objective.”
   The opinion’s most distinctive analytical move is its characterization of the alleged CSA objective—strict nationwide prohibition of marihuana—as diminished in practice. The court highlighted an executive order calling for rescheduling from Schedule I to Schedule III (Executive Order [Trump] No. 14370 [90 Fed Reg 60541]), and quoted Standing Akimbo, LLC v United States (Thomas, J., concurring) to describe a “piecemeal” departure from strict application since Gonzales v Raich. While acknowledging “how the CSA remains written,” the court treated enforcement reality as relevant to whether state regulations “stand as an obstacle.”
6. Remedy: declaration required when merits reached.
   Even while affirming dismissal, the court modified to issue an express declaration of no preemption under Grand S. Point, LLC v Bassett. This matters because declaratory relief is meant to conclusively settle legal relations; a “dismissal after merits” without a declaration is procedurally incomplete.

C. Impact

The decision is significant for New York cannabis regulation and for preemption litigation more broadly.

• Stabilizes New York’s regulatory architecture against CSA-based facial challenges.
  By holding that 9 NYCRR parts 113, 128, and 129 are not preempted, the Third Department provides appellate-level reassurance that New York may regulate labeling, packaging, advertising, and medical cannabis operations without automatically triggering CSA “positive conflict.”
• Reinforces “no compulsion, no impossibility” in the cannabis context.
  The opinion draws a clear line: state legalization/regulation is not the same as requiring federally prohibited conduct. That framing is likely to shape how future challengers must plead and prove conflict—moving them toward concrete, as-applied fact patterns rather than generalized incompatibility claims.
• Elevates “as applied” federal enforcement posture in obstacle-preemption analysis.
  The court’s reliance on how the CSA is “interpreted and applied,” including congressional appropriations signals and enforcement prioritization, may be invoked in future disputes where federal statutes remain formally broad but practically narrowed. This approach, however, could become a focal point for further appellate review in other jurisdictions because it risks blending executive and appropriations-era enforcement dynamics into the definition of “federal objectives.”
• Procedural lesson for declaratory judgment practice.
  Litigants and trial courts are reminded that once the merits of declaratory relief are addressed, the judgment must “declare” the parties’ rights—an important detail for finality and preclusion in regulatory litigation.

4. Complex Concepts Simplified

• Supremacy Clause: Federal law overrides conflicting state law.
• Express preemption: Congress explicitly says states cannot regulate in a certain way.
• Field preemption: Federal regulation is so comprehensive that courts infer Congress meant to occupy the whole area.
• Conflict preemption: Even without express/field preemption, state law is invalid if:
  • Impossibility: you cannot comply with both state and federal law at the same time; or
  • Obstacle: state law frustrates Congress’s purposes.
• CSA “positive conflict” (21 USC § 903): The CSA anticipates parallel state laws and preempts only when the two regimes cannot “consistently stand together.”
• “As written” vs “as applied”: Courts may look not only at statutory text but also at how laws operate in practice—here, including federal enforcement tolerance and funding constraints.
• Schedule I vs Schedule III: Schedule I denotes high abuse potential and no accepted medical use under federal standards; Schedule III is less restrictive and recognizes medical use with controls. The opinion notes an executive call to reschedule, reinforcing perceived evolution in federal posture.
• Hybrid CPLR article 78 + declaratory judgment: Article 78 challenges administrative action; declaratory judgment seeks a binding court declaration on legal status (here, preemption). If the court reaches the declaration issue on the merits, it must issue a declaration.

5. Conclusion

Matter of Cannabis Impact Prevention Coalition, LLC v Hochul holds that New York’s cannabis regulations governing medical marihuana, packaging/labeling, and advertising/marketing are not preempted by the CSA where they do not compel federally unlawful conduct and do not obstruct federal enforcement. The court’s approach is notable for treating obstacle preemption as an “as applied” inquiry, factoring in congressional and executive signals that the federal government has tolerated state legalization regimes. Procedurally, the decision also reinforces that courts must issue an explicit declaration when resolving declaratory judgment claims on the merits.