Hundreds of NY Cannabis Shops at Risk From Buffer Zone Error

18 August 2025

New York’s cannabis dispensary owners are heading to court in a bid to save their businesses. Dozens of shop owners filed a lawsuit in State Supreme Court in Albany after regulators admitted they had miscalculated how far dispensaries must be from schools.

For years, the Office of Cannabis Management (OCM) measured the 500-foot buffer from school entrances rather than property lines. That mistake allowed more than 150 shops to receive licenses in locations that do not meet legal requirements. Notices sent in July warned operators that while they could stay open for now, compliance issues would arise at license renewal.

The fallout affects some of New York’s most prominent dispensaries, including those in the most populous areas, like Manhattan. Dispensary owners say they followed state guidance, invested millions in renovations, and signed long-term leases — only to learn that regulators now consider their sites noncompliant.

The state has offered relocation grants of up to $250,000, but dispensary operators say the costs of moving — from buildouts to lease penalties — far exceed that amount. Investors warn the uncertainty could derail New York’s cannabis rollout, already plagued by delays and legal battles.

Lawmakers introduced a bill (SB8469) on August 4 to grandfather in existing shops, but it remains stuck in the Senate Rules Committee. Some legislators suggest aligning cannabis setback rules with those for liquor stores, which require just 200 feet of separation from schools and houses of worship. But the legislature will not reconvene until January, unless Governor Kathy Hochul calls a special session.

For now, more than 450 licensed dispensaries across the state are left in limbo. Shop owners say the uncertainty threatens their livelihoods and the credibility of New York’s cannabis industry, just as it was beginning to find its footing.