News Summary
New York cannabis regulators have admitted to a significant error in enforcing proximity rules for dispensaries near schools, measuring from entrances instead of property lines. This miscalculation affects 152 licensed cannabis businesses, and many may face closure or relocation. The state plans to seek legislative changes to allow affected dispensaries to remain operational and has created a $15 million fund for relocation expenses. However, legal experts warn this aid may be inadequate, raising concerns about the stability of the emerging cannabis market.
New York cannabis regulators have acknowledged a significant error in enforcing proximity rules that dictate the distance dispensaries must maintain from schools. The Office of Cannabis Management (OCM) has revealed that it improperly measured compliance from school entrances instead of the legally defined property lines. As a result, 152 licensed cannabis businesses, including 105 currently operational and 47 pending applications, may face closure or have to relocate.
This miscalculation places many of these businesses, particularly 88 located in New York City, at severe risk. Currently, there are 436 licensed cannabis stores across New York State, with nearly half situated within the city. The OCM’s Director has indicated that changes to state legislation will be sought to remediate this issue, aiming to allow affected dispensaries to remain where they are without the need for immediate relocation.
The proposed legislative changes would seek to “grandfather in” those dispensaries that were licensed based on previous guidance. However, until such measures are enacted, affected dispensaries will not have their two-year licenses renewed upon expiration. As noted in an internal memo by the OCM, should the proposed legislative solutions fail to pass, these businesses could face closure or be compelled to find compliant new locations.
In response to the situation, the state is establishing a $15 million fund dedicated to assisting impacted licensees with relocation expenses or costs incurred due to the compliance issue. Each eligible licensee may apply for up to $250,000 to help manage relocation costs. Despite this support, legal experts in the cannabis industry have emphasized the inadequacy of this financial assistance, labeling it as insufficient to allow businesses to secure new compliant locations.
The situation has triggered widespread concern among various stakeholders, with many expressing alarm that the compliance issue may lead to lawsuits, further complicating the rollout of the New York cannabis market. Financially, affected businesses stand to incur losses potentially amounting to tens of millions of dollars due to costs related to relocations and breaking existing leases.
Criticism regarding the OCM’s management of cannabis regulations has emerged from legislative figures, pointing to gross mishandling that has left many operators confused about existing requirements. Assembly members have conveyed dissatisfaction over the leadership approach of Governor Hochul, emphasizing a perceived inconsistency in regulatory enforcement.
Senator Liz Krueger has announced plans to promote amendments aimed at correcting the OCM’s oversight during upcoming legislative discussions scheduled for January. The urgency for reform is accentuated by the potential legal ramifications looming over these businesses due to regulatory oversight. With the future of these dispensaries hanging in the balance, there is growing unease about the implications for market stability as New York continues to navigate its cannabis legalization framework.
Until a resolution is reached, the miscalculation by the OCM continues to leave a cloud of uncertainty over both newly-licensed and established dispensaries operating within the state. The upcoming legislative session will be critical for determining the fate of these businesses and assessing the state’s commitment to maintaining a viable cannabis market as it strives to learn from its past regulatory mistakes.
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