A Dozen Cannabis Shops Sue New York Over School Distance Rule Change

Twelve cannabis dispensaries in New York have sued the state Office of Cannabis Management (OCM) claiming that a sudden rule change threatens their livelihoods and undermines the state’s equity-focused cannabis program.

The lawsuit, filed in Albany Supreme Court, challenges the OCM’s revised interpretation of a state law requiring dispensaries to operate at least 500 feet from schools. Since 2022, regulators calculated that distance from a school’s entrance.

But beginning in July, the agency shifted its measurement point to a school’s property line, creating widespread compliance issues.

According to the OCM website, businesses found in violation can continue operating temporarily but must relocate before their licenses are either approved or renewed.

The dispensaries say the consequences of the shift are devastating, with at least 152 locations suddenly noncompliant. In their court filings, they describe the impact as “catastrophic” and “legally indefensible.”

“This is truly irreparable harm,” attorney Jorge Vasquez said on behalf of the plaintiffs. “This is way more than just financial harm to small businesses. This goes beyond money. This is time. This is resources. This is energy. This is building relationships with communities.”

Dispensary owners, in sworn affidavits, reported they risk losing their customer base, major financial investments, and staff positions if the new rule is enforced. Many say they already spent hundreds of thousands, and in some cases more than $1 million, on construction costs for their storefronts.

The lawsuit contends that the OCM violated the State Administrative Procedure Act by sidestepping the legally required “notice-and-comment” process. It also argues that the rule change infringes on dispensary owners’ rights to due process and equal protection.

State officials said they’ve already informed 44 applicants and 108 license holders that their locations fall within restricted zones under the new rule. To assist affected businesses, New York created a $15 million relief fund allowing applicants to apply for up to $250,000 in support to secure new locations.

In response to the controversy, Kristin Devoe, spokesperson for Governor Kathy Hochul, said, “the governor has been clear that she will work with the Legislature to ensure these hardworking businesses are able to continue to operate without interruption.”

The Office of Cannabis Management has not yet issued a public comment on the lawsuit.

A Dozen Cannabis Shops Sue New York Over School Distance Rule Change