New York’s cannabis industry faced a major crisis when a state regulatory error threatened to shut down over 150 dispensaries. A mistake in how officials measured the required distance between cannabis shops and schools put numerous businesses at risk. However, a recent temporary agreement has provided a much-needed reprieve, offering a moment of stability in the state’s retail saga.
The Measurement Mistake That Shook an Industry
The core of the issue stems state law which mandates that retail storefronts must be at least 500 feet away from schools. Since the program began in 2022, the Office of Cannabis Management (OCM) measured this distance from the entrance of the dispensary to the entrance of the school. This seemed straightforward, and businesses secured locations and long-term leases based on this official guidance.
However, in July, under new leadership, the OCM audited its practices and discovered a critical misinterpretation. The agency announced that the correct way to measure the buffer zone was from the dispensary’s entrance to the school’s property line. This seemingly small change had massive implications, suddenly putting 152 cannabis businesses—108 licensed dispensaries and 44 pending applicants—in violation of state law.
The majority of these shops, 89 to be exact, are located in New York City, where property lines can be unpredictable. Many of these businesses were established under social equity programs, designed to give opportunities to individuals and communities previously harmed by cannabis prohibition.
Governor Hochul’s Promise to Prevent Closures
The news sent shockwaves through the industry, with operators facing the possibility of forced relocation or complete closure. Many had poured their life savings and secured decade-long leases based on the state’s initial approval. The financial and personal devastation would have been immense.
In response to the outcry, Governor Kathy Hochul stepped in, vowing that no dispensaries would be forced to close due to the state’s error. Reports indicated the governor was “furious” about the blunder’s impact on small business owners. She directed her staff to find a solution that protected the affected entrepreneurs while still complying with the law. Governor Hochul’s office announced plans to pursue a legislative fix that would align the cannabis regulations with those for liquor stores, which are also required to maintain a 500-foot distance from school entrances.
While working on a long-term solution, the administration put relief measures in place. The OCM allowed current license holders to continue operating and established a $15 million Applicant Relief Program to assist those who had not yet opened.
Lawsuit Leads to a Temporary Deal
Despite the governor’s assurances, the threat of enforcement lingered. In response, a group of retailers filed a lawsuit against the OCM, challenging the newly enforced buffer zone policy. The lawsuit argued that penalizing businesses for a mistake made by the state was unfair and would cause irreparable harm, particularly to social equity licensees who formed the backbone of the state’s legal market.
The legal pressure resulted in a breakthrough. In a legal filing submitted in the State Supreme Court in Albany, the state attorney general’s office detailed a temporary agreement, as reported by the New York Times.
As part of this deal, the OCM will postpone the enforcement of the revised buffer zone policy until February 15. This five-month reprieve allows the affected cannabis shops to remain open and operational while the state legislature works on a permanent fix.
What’s Next for New York’s Cannabis Retailers?
The temporary agreement is a significant victory for the dispensaries, but the fight isn’t over. The long-term stability of these businesses now rests with the New York State Legislature, which is expected to take up the issue when it reconvenes in January. The proposed legislative solution would “grandfather” in the existing dispensaries, allowing them to remain in their current locations.
There appears to be bipartisan support for such a measure. Key lawmakers, including State Senator Liz Krueger, one of the architects of the original legalization law, have pledged to support a fix. Even some Republican lawmakers have expressed sympathy, acknowledging the unfairness of the situation. While the governor’s promise provides a strong foundation for a positive outcome, OCM noted that lawmakers may not pass the legislation.
This entire episode highlights the immense challenges of building a new industry from the ground up. For now, New York’s cannabis retailers can breathe a collective sigh of relief, but all eyes will be on Albany in the new year to see if lawmakers will make good on the promise to protect these pioneering businesses.
