Zoning issues plague Cannabis entrepreneurs in New York
Zoning issues are limiting dispensary locations.
When New York’s Office of Cannabis Management granted a conditional dispensary license to Union Chill, the team behind the Southern Tier Conditional Adult-Use Retail Dispensary (CAURD) thought they’d cleared the largest hurdle to open their shop.
That was before Union Chill hit a zoning snag with local officials, said Josh Canfield, a managing partner in the business.
Canfield found a location in Corning, which his team vetted with OCM. The agency confirmed in early March that the location satisfied the requirements in their draft regulations, he said. Union Chill then appeared before the city’s Planning Commission, which requested the team amend some details on their application, and come back on May 2.
But on May 1, Corning’s City Council passed a zoning ordinance requiring a 500-foot buffer between cannabis dispensaries and “community facilities,” Canfield said, and the Planning Commission tabled Union Chill’s application the next day.
“The ordinance that they put in there, it literally rules out about 95% of the city limits,” Canfield said. “The other areas that are available are residential areas,” he said – not meant for commercial enterprises.
Under the Marijuana Regulation and Taxation Act, cities and towns in New York had until Dec. 31, 2021, to opt out of allowing adult-use cannabis dispensaries and/or consumption lounges within their borders. If they did not opt-out, the OCM holds most regulatory authority over dispensaries – but city and town officials may still impose “time, place and manner” restrictions, like hours of operation and zoning.
However, a half-dozen cannabis business owners and service providers who spoke with NY Cannabis Insider said some cities and towns may allow weed businesses on paper, but are creating zoning standards that make it nearly impossible for dispensaries to open within their borders.
“They’re creating a new zoning issue that doesn’t really go along with what the OCM – in spirit and intention – is trying to work out right now,” Canfield said.
Under the MRTA, cities and towns may opt out of allowing cannabis retail or consumption lounges, but the law limits their rulemaking purview over these establishments once the municipality opts in, said New York cannabis attorney Lauren Rudick.
Municipal leaders aren’t allowed to create additional burdens like taxes and fees on dispensaries, unless they do the same to similar retailers like liquor stores, Rudick said. Still, she said, the zoning process provides local officials a powerful cudgel to wield.
“We’re seeing municipalities create different ways to regulate cannabis uses,” Rudick said. “There’s definitely ways to play around with that in ways that can frustrate applicants, and make things very challenging.”
Local ordinances fall on top of proposed OCM regulations that don’t allow dispensaries to locate within 1,000 feet of each other in dense areas or 2,000 feet in more lightly populated regions – although a current OCM proposal would allow officials to grant exceptions.
With the combination of OCM siting restrictions and tightening local zoning for cannabis retailers, some of Rudick’s clients are finding there are extremely limited areas where towns will allow a dispensary, and even those rules are subject to change.
“You effectively have these caps that are created at the local level,” Rudick said. “I think the biggest frustration I’m hearing from my clients is not knowing how or when to invest in real estate with this moving regulatory target.”
Central New York
Sarah Stenuf, a cannabis business advocate and owner of licensed cannabis cultivator Ananda Farms, said she’s seeing would-be dispensaries getting held up in the zoning process in Central New York.
Recently, she said, the city of Fulton’s Common Council approved a moratorium on smoke and vape shops, which could apply to dispensaries.
Fulton also requires businesses to buy or rent space before beginning the zoning and permitting process, Stenuf said. That means businesses have to rent or buy space before seeking local approval, even though it’s impossible for owners to know whether the location will fit local and state siting requirements.
And other zoning processes in Fulton and plenty of other municipalities – the creation of overlay districts, special use districts, and other maneuvers – can allow cities and towns to effectively ban most dispensaries.
“For the municipalities, they feel like it helps them, because they feel like they’re in control and they can dictate how you operate, when you operate, and where you operate,” Stenuf said.
Stenuf, who has attended myriad local government meetings to advocate for cannabis businesses, said local officials who employ heavy-handed zoning approaches seem to do so more out of fear than animus. Officials in some towns have told her that OCM officials are often slow to answer questions about what cannabis commerce will look like – likely because the agency doesn’t currently have the staff to field all these inquiries while also finalizing regulations and litigating lawsuits, Stenuf said.
If OCM created a division for municipal relations, they could probably alleviate many of the concerns that lead cities and towns to impose harsh zoning restrictions on weed shops. In any event, OCM will have to take some kind of action to nudge local officials into loosening restrictions.
“OCM needs to enact more [rules] onto local municipalities, and put out a local municipal guideline … or we’re going to be in serious trouble where nobody’s allowed in these cities,” Stenuf said.
“We have conditional licensees with very few investors, now being limited on the locations and areas they can secure, because the cities are pulling these – in my eyes – impractical and unethical loopholes,” Stenuf said.
Long Island
Zoning issues on Long Island, one of the state’s most populous regions, remain as acute as ever, said Beryl Solomon, who runs a CBD-focused ecommerce business called Poplar and plans on applying for an adult-use retail license. Solomon has been advocating for opt-out towns on Long Island to allow cannabis commerce, and for the few that allow it to loosen restrictions.
Those efforts haven’t garnered results.
Babylon, for example, opted in for dispensaries, but passed zoning restrictions that relegate any new weed shop to zoned industrial areas that are at least 1,000 feet from residential housing. That, Solomon said, only leaves an industrial area of East Farmingdale village near Route 110.
Compounding the problem, Solomon said, is the fact that large medical cannabis companies will eventually be able to co-locate adult-use sales at their current medical locations. That means that The Botanist in East Farmingdale – which is owned by multi-state company Acreage – will probably eventually sell adult-use weed from a prime location, while any CAURD dispensary approved in the town will do business in an industrial park with little foot traffic.
“The zoning just seems to be another form of Reefer Madness,” Solomon said. “It seems to be another way that officials can ‘not-in-my-backyard’ this.”
David Falkowski, founder of Long Island-based processing business OMO Labs, LLC, agreed that obtaining zoning approval for cannabis shops is incredibly onerous. The only towns there that allow dispensaries and/or consumption lounges – Babylon, Brookhaven, Riverhead and Southampton – all have processes that take between six months and a year, Falkowski said.
However, Falkowski said, much of the zoning heartburn cannabis entrepreneurs face on Long Island has more to do with a general culture of strict zoning for any new businesses than specific animus toward cannabis. But tight zoning restrictions could mean only a handful of dispensaries will be able to open in a highly populated region.
“They’re going to have to loosen the zoning regulations a little bit to make more space for dispensaries available,” Falkowski said. “I think it’s really important … the OCM and the state to come in with gentle, guiding hands.”
For now, it’s important for prospective dispensary owners to participate in local politics, and engage with local leaders, Stenuf said. A large part of the problem, she said, is municipalities – especially smaller towns – fear they might allow bad actors to set up shop, and incur unsustainable legal fees trying to fix their mistake.
“I understand the hesitation from local municipalities … a lot of them feel pressured, it seems like it’s going to be out of their control – and small towns, especially, don’t like that,” Stenuf said. “I think a lot of this would be better if they had somebody to work with.”
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