Legal Action Initiated Against New York Cannabis Regulators

Albany, New York – Legal Action Launched Against Cannabis Regulators

A coalition of licensed cannabis operators has initiated a lawsuit against the New York Office of Cannabis Management (OCM) and the Cannabis Control Board, aiming to impede a new regulatory interpretation that could compel at least 152 dispensaries to relocate or shut down. This action, filed in the New York Supreme Court in Albany on August 15, 2025, is backed by Housing Works Cannabis Co. and 11 other plaintiffs impacted by the policy change.

The group is advocating under the campaign titled “Save New York Legal Cannabis for All.” Plaintiffs claim they operated in accordance with state rules established almost three years ago, prior to the recent OCM policy shift. This shift altered how distance measurements from schools are calculated, classifying many dispensaries that once complied with regulations as noncompliant. The implications of this classification threaten the leases, license renewals, and financial stability of affected operators.

Background of the Legal Challenge

The policy modification was announced in July 2025, following feedback from the community regarding the original proximity rules, which the OCM took years to develop. The new interpretation was prompted by a miscalculation communicated to dispensary owners in August 2025, which stated that prior approvals were based on distance from the school’s front door rather than from the property line. With this revision, some dispensaries, including notable operator Housing Works Cannabis Co., are now considered too close to local schools.

The Cannabis Retail Alliance of New York has expressed solidarity with the affected businesses, stressing the importance of maintaining stability within the state’s cannabis market. Significantly, nearly 90% of the dispensaries affected by this policy change are owned by justice-involved individuals, many of whom belong to underrepresented communities, including Black and Latino populations. These business owners were promised a chance for generational wealth as part of reparations for the impacts of the war on drugs.

Impact on Business Owners

Concerns have been raised by women in the cannabis industry and veterans regarding potential financial ruin and insurmountable debt due to looming business closures under this policy. The lawsuit outlines ten causes of action against the OCM’s new interpretation, including claims of unlawful rulemaking, arbitrary agency action, and violations of due process as defined by both state and federal law. If successful, the lawsuit would nullify the OCM’s reinterpretation of the distance regulations, affirming the compliance status of many existing dispensary locations.

Future Proceedings and Legislative Actions

A preliminary hearing for the case is set for August 29, 2025. As the situation evolves, city council members, such as Gale Brewer, are advocating for an approach that would allow these dispensaries to be grandfathered into compliant status, rather than shutting them down due to bureaucratic errors. Governor Kathy Hochul has condemned the miscalculations and expressed her support for the affected cannabis businesses, underscoring the need for a resolution.

In light of the continuing complications, the OCM is working on a temporary solution to permit businesses to remain operational while legislative changes are sought. A bill aimed at modifying the current law to potentially include protections for impacted dispensaries is being developed, with Senator Luis Sepúlveda introducing it earlier in August 2025.

This legal action reflects ongoing tensions within New York’s cannabis regulatory framework and the significant impact on those who have invested in the industry under previously established guidelines. As the case progresses, the future of these dispensaries remains uncertain amid an evolving legal landscape.