New York Governor Kathy Hochul is vowing to keep cannabis dispensaries open despite a regulatory blunder that has left over 150 businesses in potential violation of state law. This comes after the Office of Cannabis Management (OCM) discovered it had been incorrectly measuring distances between dispensaries and schools since the program’s inception in 2022.
The governor’s pledge offers hope to business owners who previously faced the devastating possibility of forced relocation or closure due to what officials acknowledge was an error in their own regulatory interpretation.
The Measurement Mistake That Shook the Industry
The crisis began when OCM’s new leadership conducted an audit of existing practices and discovered a fundamental error in how the agency had been applying Cannabis Law § 72(6). This statute requires for New York cannabis retail storefronts to maintain a minimum distance of 500 feet from school grounds and 200 feet from houses of worship.
Since launching the program, OCM had been measuring these distances from building entrance to building entrance. However, the correct legal interpretation requires measuring from the dispensary entrance to the school’s property line boundary. This seemingly minor technical difference has created major consequences for businesses that followed the state’s original guidance in good faith.
The error affects 152 cannabis businesses statewide, including 108 already-licensed dispensaries and 44 pending applicants. New York City bears the heaviest impact, with 89 of the affected licensed businesses located within the five boroughs.
Hochul’s Response and Commitment
Governor Hochul has made it clear that existing dispensaries will not face punishment for the state’s mistakes. “I don’t want them screwed,” she stated during a recent interview.
The governor’s office characterized her reaction to learning about the situation as “furious” about the impact on small businesses. She immediately convened staff to develop solutions that would minimize harm to affected operators while ensuring compliance with state law.
Hochul has directed OCM to work toward a legislative solution that would align New York cannabis dispensary regulations with those governing liquor stores.
Currently, liquor establishments must maintain 500 feet from school entrances, a standard the governor believes should apply to cannabis businesses as well.
Legislative Solution in Development
The administration is actively pursuing legislation that would grandfather existing dispensaries, allowing them to remain at their current locations despite the proximity issues. This recognizes that many business owners signed long-term leases and made substantial investments based on state-approved locations.
State Senator Liz Krueger, one of the architects of New York’s cannabis legalization law, has pledged her support for corrective legislation when the legislature reconvenes in January. “There’s no reason for anyone to be telling anyone you might have to close your store or move. Because this can be fixed,” Krueger stated.
Even Republican lawmakers, despite their general opposition to cannabis legalization, have expressed sympathy for affected business owners.
Assembly Minority Leader William Barclay acknowledged that he could “support legislation that would cure this situation,” recognizing the unfairness of penalizing businesses for the state’s error.
Immediate Relief Measures For New York Cannabis Dispensaries
While working toward a legislative solution, the Hochul administration has implemented several immediate measures to support affected businesses.
OCM announced that current license holders can continue operating while renewal applications are processed, provided they submit timely and sufficient renewal paperwork.
The state has also established a $15 million Applicant Relief Program offering up to $250,000 in assistance to affected applicants who have not yet opened their businesses. This funding can help cover costs associated with finding new locations or expenses related to their original, now non-compliant sites.
Additionally, OCM has committed to temporarily approving renewal applications for existing dispensaries as long as there are no major operational issues with the business.
The Larger Context For New York’s Cannabis Industry
This regulatory correction represents another significant challenge for New York’s cannabis industry, which has faced numerous obstacles since legalization began.
The state’s rollout has been marked by slow license approvals, complex equity requirements, and ongoing competition from unlicensed operators.
Many of the affected businesses were approved under the state’s social equity programs, designed to provide opportunities for communities disproportionately affected by cannabis prohibition.
The relocation requirement threatened to undermine these equity initiatives by forcing operators to abandon established community relationships and investments.
The financial implications extend beyond simple relocation costs. Business owners in New York City often sign 10-year leases, meaning they could remain financially responsible for their original locations even if forced to move.
The disruption to established customer relationships and community connections adds another layer of complexity to the situation.
Moving Forward
The success of Governor Hochul’s promise depends largely on legislative action when lawmakers return to Albany in January. While the governor has expressed confidence in finding a solution, the OCM’s official guidance notes that “passage of proposed legislation is the prerogative of the New York State Legislature and is not a guarantee.”
For now, affected dispensaries can continue serving their communities while the state works toward a permanent solution. The governor’s commitment to preventing closures, combined with bipartisan legislative support, suggests that these businesses may ultimately be able to remain at their current locations.
This situation serves as a reminder of the importance of precise regulatory implementation in emerging industries. While the measurement error created significant uncertainty for those the cannabis industry in New York, Governor Hochul’s response demonstrates a willingness to take responsibility for state mistakes and work collaboratively to protect affected entrepreneurs.
The resolution of this crisis will likely influence confidence in New York’s cannabis regulatory framework and could set precedents for how the state handles similar implementation challenges in the future.
