On July 28, 2025, the New York State Office of Cannabis Management (OCM) revealed that they have taken inconsistent and positions with respect to measuring distances between dispensaries and sensitive locations in close proximity, which has the potential to impact hundreds of already-licensed businesses. New York State has at least 152 licensed adult-use dispensaries and pending dispensary applicants with location approvals, despite being too close to a school's property line —violating the state's rule requiring at least 500 feet between a dispensary and a school. The inconsistent approach stems from measuring from the school entrance door to the dispensary entrance, instead of from the property line, as mandated by law. This misinterpretation impacted roughly 105 final-licensed businesses - including approximately 60 that are currently operating—and 47 pending applications, with 88 of the final-licensed stores located in New York City alone.
Section 72(6) of the MRTA states: "No cannabis retail licensee shall locate a storefront within five hundred feet of a school grounds as such term is defined in the Education Law or within two hundred feet of a house of worship." Section 409(2) of the Education Law in turn states: ". . .any building, structure and surrounding outdoor grounds, including entrances or exits contained within a public or private pre-school, nursery school, elementary or secondary school's legally defined property boundaries as registered in a county clerk's office." Going forward, OCM will assess distance, in a straight-line measurement, from the main entrance of a dispensary location to the nearest property line boundary of a school's ground.
Immediate Fallout and Industry Response
OCM Executive Director Felicia Reid acknowledged the oversight and announced a potential legislative fix that would grandfather in all affected businesses—allowing them to remain in their current locations despite non-compliance, should lawmakers approve the amendment. Without the legislative change, those stores would be ineligible for license renewal unless they change locations to a new, compliant location. This is cold comfort to open stores who would need to break current leases, potentially deal with personal guarantees on such leases, and find a new, likely less-desirable location. In some instances, certain operational stores are only a few months away from their renewal, giving them very little time to scramble for a new location or be forced to shut down their business.
Applicants are subject to a provisional period, after which time the license will automatically expire if the applicant has not secured a compliant location. OCM stated that they intend to extend the provisional period deadlines for impacted applicants.
In an attempt to help cushion the impact, a statewide $15 million relief fund was launched, offering up to $250,000 per business to cover relocation or related costs. In reality, it's unlikely that this amount will cover the actual losses suffered by open stores or for applicants currently spending capital to build out and operationalize their previously approved locations.
Applicants who continue to search for compliant locations, in addition to the 152 pre-operational or operational dispensaries, will not face an even more daunting task of trying to secure a compliant location that complies with the existing "buffer rules" (ie, stores must be at least 1,000 or 2,000 feet from another dispensary, depending on the population of the applicable municipality) without knowing in all cases whether the conflicting dispensary location itself is non-compliant and will eventually be closed. At best, this will increase the time and cost of securing a compliant location and/or pursuing the already high-risk path of seeking a public convenience and advantage waiver, in light of OCM's recently-adopted policy of invalidating an application if a waiver is denied.
Toward Legislative Fixes and Industry Reform
To prevent similar missteps, Senator Liz Krueger plan to submit amendments to Section 85 of the MRTA when the session returns in January 2026 to grandfather in existing stores, but query whether this would apply to all or some of the 152 impacted applicants and licensees. Either way, for many of those impacted, January 2026 is far too long to wait, especially when some dispensary owners find themselves under the gun to relocate in the next 60 days because of their renewal deadline.
What is next?
Much like how OCM has revealed their previous errors, you should not assume that OCM is correct in its conclusions now if you are impacted by this recent development. We recommend that all applicants and licensees should:
- Undertake their own measurements in accordance with updated guidance.
- Review resources of the New York State Education Department and local County Clerks to confirm that the potentially disqualifying school and/or house of worship is appropriately registered as such.
- Prepare arguments and defenses as to why the site should not be disqualified, or, by virtue of where the license holder is in the approval process, why they should be treated differently.
- To the extent you are ultimately forced to move locations, prepare compelling proof of any damages or other expenses otherwise collectible from the OCM.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
