On July 28, New York State’s Office of Cannabis Management (OCM) admitted an unfortunate mistake: it gave out nearly 200 Conditional Use Adult Retail Dispensary licenses to businesses that violated school proximity regulations. As a result of the state’s oversight, over 150 retailers were informed that they’d either need to relocate or close—60 of them were already operating. Now, almost three weeks later, twelve of the dispensaries have filed a lawsuit over the alleged rug pull.
RELATED: Will this city be the new ‘cannabis capital of the globe’?
Of the twelve listed plaintiffs, seven are licensed and operational, and five are permit holders who were planning on opening for business soon. Among those listed are ConBud and Housing Works, the dispensary that recorded the first legal weed sale in New York.
“Licensed cannabis operators across New York have worked in good faith, invested their life savings, and followed the rules set forth by the State. They are small business owners, social equity licensees, and long-standing community members who entered this market on the promise of a fair opportunity to succeed,” said the plaintiffs in a joint statement sent to GreenState. “The Office of Cannabis Management’s (OCM) recent announcement that 152 businesses will have to move their operations—through no fault of their own—breaks that promise and threatens the social equity and legacy operators who are the backbone of this industry.”
The suit lists the OCM, the NY Cannabis Control Board (CCB), board Chair Jessica Garcia, and the OCM’s acting Executive Director Felicia Reid as defendants. In the complaint, the plaintiffs called the OCM’s recent moves “catastrophic and legally indefensible.” They are asking a judge to prevent the OCM from retroactively enforcing the state’s school proximity regulations, as well as to declare that license applications or renewals cannot be denied on the basis of “newly identified reasons.”
The OCM declined to comment on the pending litigation.
What happens in the meantime?
After the initial blunder in July, Gov. Kathy Hochul (D) announced that she would request new state legislation to allow all previously granted licensees to remain at their current locations. According to the New York Post, Sen. Liz Krueger (D-Manhattan) announced that she’d push to address Hochul’s concerns by January 2026.
While this is positive news, several of the affected stores are due to renew their permits before this deadline, warranting more immediate action. In the meantime, impacted business owners can apply for up to $250,000 to cover losses and/or to find new storefronts. Reid also clarified that the stores can remain operational until the CCB makes a final decision.
RELATED: Legalization Nation: New York cannabis faces another setback
In a time of tumult and uncertainty, New York’s cannabis market will have to find a way to build itself back up and regain the trust of its participants. This suit sets a clear precedent that cannabis businesspeople in the state won’t accept the chaos anymore.