A New York appellate court has reversed a lower court's decision that granted attorneys' fees to Groovy Vibes, LLC, a cannabis store, in a dispute with the New York City Sheriff's Office. The court ruled on November 5, 2026, that the store did not present a substantial federal constitutional claim, which is necessary to qualify for such fees under federal law. This ruling affects how businesses involved in cannabis sales can seek legal fees after disputes with city authorities.

The case stems from an inspection conducted by the New York City Sheriff's Office on July 25, 2024, at Groovy Vibes' store. The Sheriff's Office alleged that the store was engaged in the unlicensed sale of cannabis products. Following the inspection, several products were seized, and the store received a summons for the alleged violations. A subsequent hearing before the Office of Administrative Trials and Hearings (OATH) resulted in a penalty against Groovy Vibes.

However, the store contested the decision. On June 3, 2025, the Supreme Court in Bronx County annulled the OATH's determination, vacating the summons and penalty. The court found that the evidence presented during the OATH hearing was insufficient and that the store's due process rights were violated because no witnesses were available for cross-examination. Despite this victory, the court denied Groovy Vibes' initial request for attorneys' fees, allowing for a future application if properly supported.

Background

Groovy Vibes, LLC, operates a hemp store in New York City and became involved in a legal dispute with the New York City Sheriff's Office regarding the sale of cannabis products. The Sheriff's Office conducted an inspection in 2024, which led to the seizure of products and a summons for unlicensed sales. The store argued that it was complying with state laws regarding hemp and cannabis sales.

The case progressed through the legal system, culminating in a hearing at OATH. The hearing officer sided with the Sheriff's Office, imposing penalties on Groovy Vibes. The store then sought relief through a CPLR article 78 petition, which is a legal mechanism in New York for challenging the decisions of administrative agencies. The petition was based on state law and did not initially raise any federal constitutional claims.

After the Supreme Court annulled the OATH's decision, Groovy Vibes moved for attorneys' fees under 42 USC §1988, which allows for the recovery of fees in certain civil rights cases. The court initially granted this motion, leading to the appeal by the Sheriff's Office.

The Ruling

The Appellate Division of the Supreme Court of the State of New York ruled unanimously to reverse the lower court's decision regarding the attorneys' fees. The court stated that the Supreme Court lacked the authority to award fees under 42 USC §1988 because Groovy Vibes did not assert any substantial federal constitutional claims in its original petition. The ruling emphasized that the store's petition focused solely on state law issues.

The court noted, "Because no federal claim was pleaded in the petition, CPLR 7806 bars an award of attorneys' fees, and the fee order must be reversed."

In its opinion, the court referenced previous cases to support its ruling, including Matter of Local 621, S.E.I.U. v New York City Dept. of Correction, which established that fees are unavailable if a petitioner fails to present federal constitutional claims. The judges involved in the decision included Kapnick, Rosado, O'Neill Levy, and Parker-Raso.

Impact

This ruling has significant implications for businesses like Groovy Vibes that find themselves in disputes with city authorities over cannabis regulations. The decision clarifies that to qualify for attorneys' fees under federal law, petitioners must explicitly raise federal claims in their initial filings. This may discourage some businesses from pursuing fee recovery unless they are prepared to establish a federal constitutional basis for their claims from the outset.

Moreover, the ruling may set a precedent for future cases involving cannabis-related businesses in New York. As cannabis regulations continue to evolve, the legal landscape surrounding compliance and enforcement will likely remain contentious. Businesses must be aware of the legal requirements for asserting claims to ensure they can adequately protect their rights and seek appropriate remedies.

What's Next

Groovy Vibes may consider appealing the ruling to a higher court, but details were not available in the court filing regarding any plans for further legal action. There are no related cases pending that were mentioned in the opinion.