Politics
New York Governor Seeks Lawmakers’ Help To Fix Marijuana Zoning Mishap That Could Shutter Over 100 Businesses
The governor of New York says she will be pushing the legislature to amend the state’s marijuana law to address a recently identified zoning issue impacting more than 100 licensed cannabis businesses that are apparently located too close to public schools or places of worship than is allowed under current statute.
Despite the state’s efforts to build up the industry, there was a critical oversight that regulators have since identified: At least 108 establishments are located less than 500 feet from the property line of schools or churches—and another 44 adult-use license applicants have been moving through the process with plans to open shop in a restricted zone.
The dilemma comes down to an apparent misreading of the state’s cannabis statute, with officials making zoning decisions based on a zoning law that applies to liquor stores. While those businesses’ distance to certain buildings is measured from door-to-door, the zoning law for marijuana businesses is based on distance from the property lines, which in many cases evidently means they’re in violation of the 500-foot requirement.
“The legislature, when they wrote the cannabis law, decided to have 500 feet away from the property line,” Gov. Kathy Hochul (D) told Spectrum News NY1 in an interview on Thursday. “Some campuses of schools are quite large, so it does push out the opportunity for these businesses quite a bit further out.”
“The state Liquor Authority, for example, has it be 500 feet from the front door, which is how it was applied by, interestingly, the previous individuals running Office of Cannabis Management who are no longer there,” she said. “We went in and did an audit to see what was not working there and this was uncovered that they had applied the law incorrectly.”
While the situation is in flux, Hochul said she doesn’t think the issue “should be born on the backs of these people,” as “so many of them, their life savings, they’re going to these businesses.”
“They’ve worked hard to go through the lengthy process to be licensed and then to have a location. So I have said we are going to stand up for them,” the governor said on NY1. “These are entrepreneurs, they’re small business owners—many from communities of color—and this is their shot to have a chance to be successful. So, we’re not going to let anything happen to them.”
“We’ll make them whole, and I have got to go back to the legislature and get them persuaded to change the law to be consistent with what we do for liquor stores, for example,” she said.
Asked whether there’s a chance that the solution could involve grandfathering existing marijuana businesses into a revised law, rather than forcing them to move, Hochul said, “I’d like to do that, yes.”
“Yeah, no, absolutely. I don’t want them hurt,” she said. “They’re part of our community already, they’re working hard, they waited a long time for this, and, basically, I don’t want them screwed.”
OCM, for its part, has announced that regulators, working with the governor’s office, are opening up a $15 million “Applicant Relief Program” for prospective licensees that have already invested in businesses that have since been found to be out of compliance with zoning rules. Eligible applicants could receive up to $250,000 to cover costs associated with finding a different location or making capital improvements to ensure compliance.
“The Office identified several licensee locations that do not comply with Cannabis Law § 72 (6). The Governor’s Office and OCM will be proposing and aggressively pursuing legislation to address licensees whose businesses are at locations in conflict with Cannabis Law § 72 (6),” OCM said. “This legislation would permit licensees to remain at their present licensed location.”
However, “passage of proposed legislation is the prerogative of the New York State Legislature and is not a guarantee,” regulators emphasized.
Felicia Reid, acting director of OCM, told Spectrum News that, “looking at the issue and understanding what cannabis law demands that necessitated a practice correction in terms of how we’re assessing locations for compliance with the cannabis law.”
“But as soon as we sort of realized the magnitude of the issue we would apply it to, we started strategizing on, ‘okay, what are some solutions that could address the issue?'” she said.
In an advisory from OCM that was released on Thursday, the office said it “will propose to the State Legislature, for its consideration during the 2026 legislative session, an amendment to Section 72 (6) as it pertains to such licensed locations.”
“The Legislature may or may not adopt OCM’s proposed amendment to Section 72(6) of the Cannabis Law. OCM will monitor the legislative process closely as it considers the renewal applications of such licensees. If the Legislature does not amend the law or amends the law in a fashion that does not remedy a license location’s noncompliance with the Cannabis Law, the renewal application must be denied.”
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Meanwhile, both chambers of the New York legislature recently passed legislation that would extend the deadline for some marijuana businesses to file electronic tax returns, sending the proposal next to the governor’s desk.
If signed into law, the proposal would give cannabis manufacturers and distributors 30 extra days to submit their tax returns following the end of each quarterly tax period. Currently the companies have a 20-day window to file the documents, which the legislation would extended to 50 days.
Sponsors of the bill have noted that Hochul vetoed an earlier cannabis business tax reform proposal late last year, claiming it would “pose significant operational challenges for the State and confusion for taxpayers,” but that they’ve worked to address those concerns in the current version.
The earlier, vetoed measure would have allowed marijuana growers and processors to pay excise taxes on an annual basis rather than quarterly—a change that would have extended the same treatment to cannabis as the state already offers the alcohol industry.
Earlier this month, meanwhile, New York officials announced the first round of grants under a $5 million program to help retail marijuana businesses owned by justice-involved people cover startup costs.
About three months after opening up applications for the Conditional Adult-Use Retail Dispensary (CAURD) Grant Program, OCM and Empire State Development (ESD) announced on Wednesday that they have awarded 52 licensed dispensaries up to $30,000 each in funds meant for startup and operational costs such as rent, renovations, inventory tracking and security systems.
To qualify for the program, applicants need to have been “justice involved”—in other words, impacted by a marijuana-related conviction—and have some experience running a profitable business.
Meanwhile, OCM recently launched a new online map that’s meant to help adults locate licensed marijuana retailers—one of their latest efforts to encourage consumers to buy their cannabis from the regulated market.
After a rocky rollout of the state’s legalization law opened the door to a proliferation of illicit marijuana shops, the governor and regulators have prioritized educating the public about the need to purchase their products from licensed dispensaries as a health and safety imperative.
The broader New York campaign has also involved digital ads and educational resources, including a guide on safe consumption practices, as well as graphics and videos featuring licensed cannabis business owners and messaging about the benefits of participating in the regulated market.
OCM also advises that “continued enforcement against the illicit market is critical to building a health regulated market,” pointing to what it describes as successful enforcement efforts in 2024. Last spring, for example, officials in New York City launched Operation Padlock, an enforcement initiative meant to shutter illegal storefronts. Within months, licensed shops that were open before the operation began saw sales climb 105 percent, according to an OCM survey.
Regulators are also moving forward with new proposed regulations around the state’s so-called “cannabis showcase” program, which allows licensed businesses to sell to consumers at pop-up, farmers market-like events.
As originally authorized, the showcase events were largely in response to the slow rollout of New York’s adult-use marijuana program, which faced multiple delays in implementation amid litigation and other matters.
But the state’s industry has gradually expanded, with officials in January touting $1 billion in total sales since the market launched.
Separately Hochul signed state budget legislation that did not include a controversial earlier provision that would have allowed police to use the smell of marijuana as probable cause that a driver is impaired and then force them to take a drug test.
Amendments made in the legislature removed the provision, which a coalition of 60 reform groups had argued in a letter to Hochul and top lawmakers would “repeat some of the worst harms of the War on Drugs” and allow law enforcement to “restart unconstitutional racial profiling of drivers.”
A recent OCM report also found that the number of licensed marijuana retailers in the state grew by nearly threefold last year, fueling total sales in 2024 of nearly $870 million.
Including sales so far in 2025, New York’s legal cannabis market is now close to reaching $1.5 billion worth of purchases, OCM said in April.
Also that month, New York cannabis regulators and labor officials announced the launch of a workforce training program aimed at “providing comprehensive safety education to workers” in the state’s legal marijuana industry.
Separately, OCM’s press secretary recently indicated the office is working on plans to expand permitting and licensing rules that could allow adults to buy and consume marijuana at movie theaters. Authorizing sales of cannabis products at theaters would set New York apart as it continues to build upon the state’s legalization law.
Earlier this year, a collective of businesses licensed under the CAURD program called on Hochul to forgive tens of millions of dollars in high-cost loans issued under a governor-created social equity loan fund.
A state lawmaker said in December that there’s a need to extend financial aid to CAURD license holders, many of whom are struggling under the high-cost loans.
Critics—including the NAACP New York State Conference, Black Cannabis Industry Association, Minority Cannabis Business Association, Service Disabled Veterans in Cannabis Association, Drug Policy Alliance, NYC NORML and VOCAL-NY—wrote to the governor earlier that month to express dismay at what they described as marijuana regulators’ “efforts in service of big corporations at the expense of small business and equity outcomes.”
Photo courtesy of Chris Wallis // Side Pocket Images.
