In a significant legal victory for New York’s burgeoning cannabis industry, the Supreme Court of New York has granted a preliminary injunction, temporarily shielding more than 150 licensed dispensaries from potentially ruinous relocation or closure mandates. The court’s order effectively halts the enforcement of new directives issued by the state’s Office of Cannabis Management (OCM) regarding the proximity of cannabis retail stores to schools.
OCM’s Reinterpretation of School Proximity Rules Sparks Legal Battle
The controversy ignited in July 2025 when the OCM announced a revised interpretation of the 500-foot distance requirement between cannabis dispensaries and school grounds. Previously, under guidance issued on March 11, 2024, the OCM calculated this distance from the dispensary’s main entrance to the nearest school entrance or regularly used entrance. However, the OCM’s updated directive, citing a review to ensure compliance with Cannabis Law §72(6) and Education Law §409(2), redefined the measurement to be from the dispensary’s entrance to the nearest property line of the school’s grounds. This stricter measurement, particularly impactful in dense urban areas like New York City, meant that many previously approved locations were suddenly deemed non-compliant.
Businesses Faced Uprooting or Closure
The OCM’s reinterpretation threatened approximately 152 licensed dispensaries and retail applicants statewide, many of whom had invested substantial capital, secured leases, and built out their operations based on the agency’s prior assurances. The directives would have forced these businesses to relocate or risk denial of license renewals, jeopardizing millions of dollars in investments and the livelihoods of entrepreneurs, many of whom are justice-involved individuals and part of social equity initiatives. Petitioners, including Housing Works Cannabis Co—New York’s first licensed cannabis retailer and a recipient of a CAURD social equity license—argued that the OCM’s sudden policy reversal would destabilize compliant, tax-paying businesses and potentially push consumers back toward the illicit market.
Court Steps In to Provide Stability
In response to the crisis, a coalition of affected dispensaries, including Housing Works Cannabis Co, Conbud, and The Cannabis Place, filed a lawsuit against the OCM and the Cannabis Control Board on August 15, 2025. The Supreme Court of New York, in an order signed by Judge Savona, AJSC, granted a preliminary injunction on September 25, 2025. This ruling mandates that the OCM revert to its previously established method of calculating distances between dispensaries and schools, as outlined in its March 11, 2024, guidance. The injunction is set to remain in effect through February 15, 2026, providing critical stability for license renewals and new applications during this period.
Implications for New York’s Cannabis Market
This judicial intervention offers a reprieve for licensed operators, many of whom are part of social equity programs that aim to benefit communities disproportionately affected by past drug policies. The OCM itself later signaled support for the injunction, acknowledging the need for stability while legislative solutions are explored. Governor Kathy Hochul has referred to the OCM’s initial misinterpretation as a “major screw up” and has indicated support for legislative action to resolve the issue. The legal challenges underscore the complex and often contentious nature of New York’s cannabis regulatory rollout, which has been marked by numerous legal battles and delays since its inception.
The preliminary injunction allows licensed businesses to continue operating without the immediate threat of closure, preserving investments and jobs. It also buys time for lawmakers to potentially craft a legislative solution that addresses the proximity rule conflict, ensuring a more predictable and equitable future for New York’s trending cannabis industry. This development is crucial news for stakeholders navigating the evolving legal and regulatory landscape of cannabis in the state.
