[co-authors: Felicia Fortel, Terran Cooper]
In a shocking announcement, the New York Office of Cannabis Management (OCM) informed 108 adult-use dispensary license holders, including 89 in NYC, that the current locations of their dispensaries are in violation of the Cannabis Law. As a result, for retail dispensaries currently operating, affected licensees now face the prospect of relocating their businesses prior to the renewal date on their license. For licensees who had received proximity protection and were moving forward towards opening, they can no longer proceed at their sites.
Pursuant to Cannabis Law § 72(6), “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.” Education Law § 409(2) defines “school grounds” as “...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.” In its July 28, 2025, bulletin, OCM Moves Into Compliance With Cannabis Law § 72(6), OCM states: “Reading these sections of law together, a cannabis retail dispensary cannot be within 500 feet of a school’s property line.” OCM had previously allowed the 500-foot distance to be calculated from the entrance of the school to the dispensary site.
Prior to this announcement, OCM had already granted almost 200 adult-use retail dispensary licenses for locations that had passed muster under its earlier interpretation, but that now fail. An OCM internal audit revealed the discrepancy. Now, 108 active licensees and 44 pending applicants with proximity protection may be out of compliance with Cannabis Law § 72(6) as currently interpreted.
The consequences are enormous. Those already up and running with fully operational stores will need to find a new location prior to renewing their licenses, and those going through the application process will need to select a new location.
According to the July 28 announcement, Felicia A.B. Reid, Esq., the Acting Executive Director of OCM, is “actively exploring” pursuing legislation which would enable impacted licensees to remain at their current location. To further mitigate its miscalculation, OCM, in coordination with the Governor’s Office and Empire State Development, has established a $15 million relocation assistance program. Impacted licensees will be able to seek coverage of up to $250,000 of expenses relating to finding a new location and/or location acquisition/capital improvements made to their original location. The funds identified for assistance, despite the intention to provide a potential lifeline for operators, are not going to come close to covering all of the expenses incurred by affected operators, many of whom have entered long-term leases and spent well over $250,000 in getting their stores operational.
For applicants who had already received proximity protection for their locations, OCM may issue a provisional license to allow submission of a compliant site for consideration. For those with existing provisional licenses, OCM and the Cannabis Control Board intend to extend the provisional period.
This latest development reminds everyone in the cannabis space that licensees cannot afford to take compliance for granted. As OCM’s interpretations and enforcement actions change, whether due to court action or on the agency’s own initiative, experienced counsel can help licensees make informed decisions and protect their interests in this ever-changing legal landscape.
Sources:
OCM informs cannabis dispensaries they must relocate further away from schools - City & State New York
OCM admits it miscalculated distance of cannabis shops
https://cannabis.ny.gov/proximity-correction
