A dozen cannabis shops in New York are suing the state Office of Cannabis Management, arguing that a recent rule change threatens their businesses and the state’s equity goals.
The lawsuit filed in Albany Supreme Court challenges the recent reinterpretation of a state law requiring cannabis dispensaries to operate 500 feet away from a school. Since 2022, the Office of Cannabis Management measured that distance from a school’s entrance, but in July, it instead began measuring from the school’s property line.
Dispensaries in violation of the new rules are allowed to remain open for now, but are required to find new locations before their licenses will be approved or renewed, according to the Office of Cannabis Management’s website.
The plaintiffs in the lawsuit argue the effects of the rule change, which render at least 152 dispensaries noncompliant, are “catastrophic” and “legally indefensible.”
“This is truly irreparable harm,” said Jorge Vasquez, the plaintiffs’ attorney. “This is way more than just financial harm to small businesses. This goes beyond money. This is time. This is resources. This is energy. This is building relationships with communities.”
In sworn affidavits, the dispensary owners say they’d lose their customer base and significant monetary investments, and would be forced to cut jobs, if they were able to remain open. The shops are asking the court to stop the Office of Cannabis Management from enforcing the new rule and issue a judgement annulling the rule change.
The lawsuit argues the rule change violates the State Administrative Procedure Act by bypassing the mandated “notice-and-comment” period. It also argues that the rule change deprives the dispensaries of rights to due process and equal protection.
The affected dispensaries spent hundreds of thousands of dollars, and in some cases upwards of $1 million, on construction costs for their retail locations, according to the lawsuit.
State officials said they’ve notified 44 applicants and 108 licensees that their dispensary locations conflict with the new rules. The state has set up a $15 million relief program allowing affected dispensary applicants to receive up to $250,000 to help find a new location.
In a statement, Kristin Devoe, a spokesperson for Gov. Kathy Hochul, said “the governor has been clear that she will work with the Legislature to ensure these hardworking businesses are able to continue to operate without interruption.”
Spokespeople for the Office of Cannabis Management did not immediately respond to a request for comment.
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