New York Cannabis Shops in Legal Limbo Over School Distance Miscalculation

New York’s legal cannabis industry is in turmoil after officials admitted to a critical error in the way they measured the required distance between licensed marijuana dispensaries and schools. For the past three years, the state’s Office of Cannabis Management (OCM) had been measuring from the front doors of both the stores and schools, rather than the legal requirement of using the property lines [1]. As a result, about 100 cannabis shops—many of them in New York City—are now in legal limbo, raising urgent questions about their futures [1].

Business owners received the news in a notice from the OCM last month, with acting executive director Felicia A.B. Reid expressing deep regret for the oversight. “To give you this news, and for the weight of it, I am incredibly sorry,” she wrote [1]. The error affects 60 currently licensed stores, 40 licensed but not yet opened, and nearly 50 more in the application process [1]. The OCM has allocated up to $250,000 in relocation funds, but a long-term solution requires legislative intervention, which is not guaranteed [1].

Industry participants have reacted with frustration and concern. Osbert Orduña, owner of The Cannabis Place, a dispensary now deemed too close to a preschool, called the handling of the issue a “complete and utter failure in leadership” [1]. Others, like Jillian Dragutsky, who recently opened a Brooklyn dispensary called Yerba Buena, worry about the operational risks, including the ability to bank, secure insurance, and purchase inventory [1]. The uncertainty has made it difficult to plan for the future, with Dragutsky asking, “How do you grow your business not knowing where you’re going to be a few months from now?” [1].

Governor Kathy Hochul, who has previously referred to the rollout of the state’s legal cannabis market as a “disaster,” acknowledged the problem as a “major screw up” and pledged to push for a legislative fix. She emphasized that many business owners had invested their life savings into the industry and deserved a stable regulatory environment [1]. Hochul has urged lawmakers to revise the law to allow these businesses to remain in their current locations [1].

The crisis reflects broader challenges in the OCM’s management. An internal review last year identified issues such as inexperienced leadership and inconsistent regulations [1]. While the state has promised administrative reforms, the latest error highlights the difficulties in building a coherent regulatory framework for a newly legalized market [1].

In the meantime, affected businesses have been allowed to continue operating, even with expired licenses, provided they apply for renewals. The OCM has also stated that licensees can request a “letter of good standing” to demonstrate compliance with regulatory standards [1]. However, these temporary measures offer little certainty, and the absence of a legislative resolution has left many in a precarious position.

With the state legislature not scheduled to reconvene until January, the path to a resolution remains unclear. For now, the focus remains on whether New York can provide the clarity and support its cannabis operators need to move forward [1].

Source: [1] New York realizes it measured incorrectly when putting weed shops next to schools and 100 dispensaries are in limbo (https://fortune.com/2025/08/14/new-york-cannabis-dispensaries-too-close-to-schools/)