New York State legalized the use, sale, and production of recreational cannabis on March 31, 2021, by way of the Marijuana Regulation and Taxation Act (MRTA). As of May 2025, New York State has issued more than 1,600 licenses across various sectors, including cultivation, processing, distribution and retail dispensaries. Approximately 560 of the 1,600 licenses are for retail dispensaries.
At the time of the writing of this article, the NYS Office of Cannabis Management (“OCM”) has announced 386 retail dispensaries are open. That suggests roughly 175 are somewhere in the final approval process – which could mean they are still looking for real estate. Most dispensary operators obtain site control over their real estate by a commercial lease. This article discusses initial “gating issues” in commercial leasing and steps to take when selecting its cannabis real estate.
- Does your targeted municipality permit retail dispensaries? Not all do. Confirm with the Marijuana Opt-Out Tracker.
- Is the proposed site in the municipality's designated “green zone” zoning district, which permits retail dispensaries? Check/confirm with the municipality’s zoning administrator/code enforcement office and confirm by reviewing the municipality’s zoning code. The vast majority of municipalities’ zoning codes can be found online.
- Confirm the proposed site’s setback: “houses of worship” -200 feet; schools – 500 feet; public youth facility -500 feet (if municipality has adopted such a rule); 1,000 to 2,000 feet from other dispensaries (including medical dispensaries a/k/a ROs – registered organizations and micro businesses) depending on whether the municipality has a population of more or less than 20,000 people. OCM has a site locator map that assists with this analysis.
- Does the property owner/landlord’s lender permit a cannabis use? Due to cannabis’ federal listing as a Schedule 1 Controlled Substance, many financial institutions will not permit a cannabis use under the lender’s loan documents.
- If the property is a multi-tenant property, are there restrictions (a/k/a restrictive covenants or prohibited uses) in other tenants’ leases prohibiting a “sin business?”
- Does the landlord’s insurance carrier permit a cannabis use? This gating issue doesn’t need to be fatal, but if in a multi-tenant property and the landlord procures insurance from another carrier and the insurance is more costly, then that cost will most generally be passed on to the cannabis operator. That may not be a big economic issue in the case of a single tenant property, where the tenant is likely picking up 100% of the landlord’s insurance cost, but in a multi-tenant property, that price differential can be material, as the dispensary operator generally would only be responsible for a pro rata share of the landlord’s insurance cost. Therefore, it is recommended that such price differential be quantified as part of the economic evaluation for the dispensary location.
There are more than 2,000 cannabis retail dispensary license applications still pending. While it is highly unlikely that all of those applications will be awarded, site selection for new cannabis retail dispensaries is a skill set that will be needed in the foreseeable future.
