New York City’s cannabis retailers are facing a major regulatory challenge after the Office of Cannabis Management (OCM) issued new guidance on how dispensaries must measure their distance from schools under Cannabis Law § 72(6). This correction redefines compliance boundaries and places dozens of cannabis retailers at risk of falling short of legal requirements.
Previously, distance was measured from a school’s entrance, but OCM has clarified that the 500-foot buffer must now extend from the property line of school grounds, aligning with Education Law § 409(2). The measurement must be a straight line from a dispensary’s entrance to the nearest point on a school property line. According to OCM, this update impacts 152 businesses statewide, including 89 licensed dispensaries and 38 applicants in New York City.
For cannabis retailers in dense urban areas, this shift significantly reduces compliant retail options. Many dispensaries had already secured leases, invested in buildouts, and gained approvals under the earlier interpretation. Now, those same investments are threatened, as businesses could find themselves within the newly defined buffer zone. Relocating is particularly challenging for cannabis retailers in New York City due to high rents, limited storefront availability, and strict zoning rules.
To assist operators, OCM has published an interactive map at local.cannabis.ny.gov. While not legally definitive, it provides a visual tool for cannabis retailers to assess their proximity risk and better understand their compliance status.
Importantly, OCM has emphasized that it is not ordering existing licensees to close or relocate at this time. Dispensaries may continue operating as Governor Hochul and lawmakers explore a legislative fix that could protect affected businesses. However, the passage of such legislation is not guaranteed and would require action by the New York State Legislature.
For applicants without final licenses, the state has introduced a $15 million Applicant Relief Program, covering relocation or capital improvement costs up to $250,000 per applicant. This program excludes current licensees, leaving many cannabis retailers to shoulder relocation burdens on their own if required.
Adding urgency, a coalition of New York City cannabis retailers has filed a lawsuit in State Supreme Court. Their legal complaint argues that OCM’s revised interpretation unfairly undermines businesses that relied on the original rules when investing in their operations.
For now, cannabis retailers must balance compliance uncertainty with business continuity. As legislative solutions are debated, the industry remains caught between evolving regulations and the economic realities of operating in one of the most competitive retail environments in the nation.
