New York Cannabis Blunder: State Admits Dispensary Location Mistake Affecting 152 Businesses

The state agency in charge of New York’s cannabis rollout has admitted it gave the green light to dispensary locations that don’t actually comply with state law. In total, 152 stores—105 licensed and at least 47 applicants—were approved despite being too close to schools.

On July 28, the Office of Cannabis Management (OCM) released a correction stating that staff misinterpreted their own guidance from 2022, which explains how to measure the legally required distance between dispensaries and nearby schools. That misstep has now thrown dozens of operators into confusion—and for some, it could put business on the line.

It All Comes Down to 500 Feet

Here’s the heart of it: state law says dispensaries can’t be within 500 feet of a school. That rule isn’t new. But how you measure that 500 feet? That’s where OCM’s staff slipped up.

The original guidance approved an “entrance-to-entrance” method, which basically involved drawing a straight line from the front door of the dispensary to the front door of a nearby school.

Turns out, that’s not what the law intended. Instead, state officials should have been using the shortest pedestrian path along public streets. That’s not just a technicality—it changes everything.

The Impact: Confused Operators, Stalled Licenses, Legal Worries

For dispensary owners, this isn’t just paperwork. It’s panic-inducing.

Some businesses have already spent thousands—sometimes hundreds of thousands—on leases, renovations, staffing, and marketing based on the original OCM go-ahead. Now they’re being told: oops, you might be too close to a school after all.

One licensed operator in Manhattan said their entire business model could collapse if forced to relocate. Others are afraid they’ll be sued or denied full approval.

• 105 licensed dispensaries affected
• 47 applicants caught mid-process
• Potential violations of the Marijuana Regulation and Taxation Act (MRTA)

“This isn’t just a minor setback,” one applicant told local press. “It’s a regulatory betrayal.”

OCM Scrambles to Contain the Fallout

The OCM says it’s now reviewing all 152 impacted cases on a “case-by-case basis.” That’s cold comfort for operators stuck in limbo.

A spokesperson for the office admitted staffers had followed flawed internal guidelines, which were “not aligned” with actual state law. But it’s not yet clear whether any of the already licensed dispensaries will be forced to shut down or relocate.

For those still in the licensing queue, timelines are suddenly blurry. Legal teams are bracing for a wave of appeals—or worse, lawsuits.

A Look at the Numbers

Here’s what’s at stake, financially and operationally, based on current projections:

Each miscalculation doesn’t just hurt a business—it dents the state’s cannabis revenue projections, too.

The Blame Game Has Begun

Finger-pointing started almost immediately.

Some critics say the OCM moved too fast to issue licenses last year under pressure to prove New York’s social equity cannabis model could work. Others blame outdated GIS systems and poor training of regulatory staff.

Then there’s the question of legal liability. Could the state be sued for damages? Technically, maybe. Practically, nobody’s sure.

There’s growing pressure from cannabis trade groups calling for immediate legal clarity and potential reimbursements. Some are also calling for a full audit of how OCM rolled out its proximity policies in 2022.

What Happens Next?

That’s the million-dollar question—literally.

For now, OCM has promised “no immediate enforcement” against dispensaries caught in this location mess. But without firm policy or new guidance, uncertainty looms.

Applicants don’t know whether to pause their leases, spend more on compliance surveys, or lawyer up.

OCM has yet to release a new timeline for re-approvals or appeal procedures. Until that happens, it’s mostly a waiting game—one that costs real money every day.