Despite the approval of 109 new adult-use business licenses Feb. 16, New York’s legal cannabis program continues to face criticism, including backlash that the requirement retailers be 1,000 feet apart is a barrier, especially in cities such as New York City, where real estate is at a premium.

Potential licensees whose chosen locations are turned down because of the rule have two options: find a new location or appeal and ask the state to make an exception.

The New York Cannabis Control Board approved 109 adult-use business licenses on Feb. 16, including 26 for microbusinesses, 25 for dispensaries, 24 for cultivators, 12 for processors and nine for distributors. The board also approved 13 provisional dispensary permits. These businesses join the state’s 58 dispensaries and 12 delivery-only operations currently serving New York.

The 13 provisional permits pertain to dispensaries that proposed retail locations too close to other legal cannabis shops. Under New York cannabis regulations, dispensaries cannot be located within 1,000 feet of each other in municipalities with more than 20,000 residents, or within 2,000 feet of each other in municipalities of less than 20,000 residents. The final regulations do provide that the CCB can waive the requirement if doing so would promote public “convenience and advantage.”

Those 13 provisional license holders have 12 months to find a new location or appeal the ruling. While there is no formal appeal process, according to the Green Market Report, which reports on the cannabis industry, at least one New York City retailer previously found in violation of the 1,000-proximity rule has sent an appeal letter to the state.

In that case, a business owner was awarded a license as a social equity applicant on Aug. 6, 2023, but her site was later denied because it was 650 feet from a medical marijuana dispensary shop known as RISE and operated by Green Thumb Industries, a Chicago-based multistate operator.

The business owner’s appeal asks that an exception be granted, noting the 1,000 feet rule only applies if a straight line is drawn, but that any person walking between the two locations would walk more than 1,000 feet to access both. The next nearest location is a half-mile away, according to the appeal letter sent to the New York State Cannabis Control Board.

The letter also notes the RISE location is too small to handle the demand in the area and adding another retailer to the neighborhood will help satisfy the need.

The state’s cannabis board has yet to reply to the appeal letter, but this is likely to play out again and again at a time when real estate is scarce, especially in New York City. Some New York legislators have discussed tweaking the law to address the issue.

Harris Beach’s New York cannabis attorneys are watching this and other related issues stalling the rollout of a market projected to generate billions of dollars annually. In fact, at the meeting where the 109 licenses were approved, the Office of Cannabis Management shared the adult-use cannabis market topped $27 million in sales in December 2023. That was the best month since the market opened, bringing total sales in that time to $183 million.

If you have questions for Harris Beach’s cannabis lawyers, please reach out to a member of our Cannabis Industry Team: attorney Francis L. Gorman, III at (585) 419-8628 and flgorman@harrisbeach.com; attorney Meaghan T. Feenan at (518) 701-2742 and mfeenan@harrisbeach.com; attorney Heidi Schult Gregory at (585) 419-8720 and hgregory@harrisbeach.com; Brendan M. Palfreyman at (315) 214-2161 and bpalfreyman@HarrisBeach.com; Marco D. Silva at (516) 880-8397 and
msilva@harrisbeach.com; Michael W. Perlo at (585) 419-8751 and
mperlo@harrisbeach.com; or the Harris Beach attorney with whom you most frequently work.

This alert is not a substitute for advice of counsel on specific legal issues.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, Long Island, New York City, Rochester, Saratoga Springs, Syracuse and White Plains, as well as Washington D.C., New Haven, Connecticut and Newark, New Jersey.