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Taylor Robinson


NextImg:NY Weed Dispensaries Sue Regulators Over Misinterpretation of State Rules

A group of cannabis dispensary owners sued New York State regulators on Friday claiming they could be forced out of business because their storefronts were too close to schools after state officials admitted recently that they had been incorrectly measuring the required distance.

Investors poured millions of dollars into dozens of cannabis shops that could now be forced to relocate or be barred from opening their doors because of the mistake by state regulators, the lawsuit claimed.

The suit, filed by about a dozen organizations and companies that have received licenses to open dispensaries in New York, petitioned the State Supreme Court in Albany to block the proposed correction to the proximity rule and find the businesses in compliance under the previous interpretation of the regulation.

“This lawsuit seeks to prevent the state from rewriting the rules midstream, stripping licensees of their rights and investments and derailing New York’s promise of an equitable cannabis industry,” according to the suit.

Last month, the state’s Office of Cannabis Management said that because of its own measuring error, more than 152 licensed dispensaries were too close to schools. State officials said that the businesses might have to relocate unless lawmakers carved out an exception allowing them to stay in place.

State law dictates that dispensaries cannot be located within 500 feet of a school, a distance that should have been calculated from the entrance of the storefront to the school’s property line, state officials have said.

But following a review of the cannabis agency’s practices, ordered by the interim executive director, Felicia Reid, officials discovered that previous regulators had been measuring the 500 feet to the school’s entrance, not its property line.

Ms. Reid apologized to the affected businesses, but cannabis regulators now say they will need legislative intervention in order to allow the dispensaries to stay in place.

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Nubia Ashley, who has spent three years trying to launch her Hell’s Kitchen dispensary, Rezidue, was recently notified by state regulators that she might need to move her business.Credit...Elias Williams for The New York Times

The lawsuit was filed against Ms. Reid, the Office of Cannabis Management and the state’s Cannabis Control Board, among others. Conbud, Rezidue and the Housing Works Cannabis Company are among the dispensaries serving as plaintiffs in the suit. Seven of the 12 plaintiffs are fully licensed businesses, while the remaining five have provisional licenses and have already invested in their storefronts’ construction, the suit said.

Gov. Kathy Hochul called the miscalculation “a major screw-up” at a news conference following the announcement by cannabis regulators. The cannabis agency declined to comment on the suit, citing the pending litigation. A spokeswoman for Ms. Hochul’s office said on Friday that the governor would work with lawmakers “to ensure these hardworking businesses are able to continue to operate without interruption.”

The website of the Office of Cannabis Management said that it hoped to pass a legislative amendment with the governor’s support in 2026 that would rescue the businesses.

The suit said that dispensary owners, operating under the assumption that their approvals by cannabis regulators were sound, “poured their life savings into launching their businesses.” They signed leases, hired employees and opened to the public “under the state’s very detailed framework.”

Jorge Luis Vasquez Jr., a lawyer for the plaintiffs, said that two state agencies had provided dispensary owners with guidelines that they followed.

For the state to crack down on dispensaries by retroactively rendering them in violation of the law would be “a fatal blow to legal cannabis,” said Matthew Bernardo, the president of Housing Works, the first organization to open a recreational cannabis dispensary in New York State after legalization in 2021.

“We want more clarity, and that’s why we brought this lawsuit,” Mr. Bernardo said.

The miscalculation is the latest setback for the state’s recreational marijuana industry, which has endured delays, lawsuits and a proliferation of illegal dispensaries. New York City’s saturated cannabis industry would take the biggest hit from the measurement error, since most of the affected businesses in the state are concentrated within the five boroughs.

Despite the rocky rollout of legal cannabis in New York, the industry is poised to make $1 billion in sales this year as of August.

Mr. Bernardo said that he and the other petitioners hoped for relief from the governor’s office in the form of a ruling that would allow the businesses that were already open to keep operating, and allow those whose applications the cannabis agency had previously approved to retain that status.

Mr. Vasquez said that 89 percent of the 152 dispensaries were owned by women, people of color, veterans or people who were affected by state marijuana laws before the drug was decriminalized.

“You promised social equity, a leg up to have profits in the future,” Mr. Bernardo said, referring to state policy that granted priority to certain New Yorkers applying for dispensary licenses.

“You’re going to turn that opportunity into a lifetime of debt,” he added. “Talk about bringing the community backwards.”

Ashley Southall contributed reporting.