On July 28, 2025, the New York State Office of Cannabis Management (OCM) confirmed what many in the cannabis industry have long suspected: inconsistent enforcement and interpretation of its own rules. This time, the fallout is devastating. In a stunning revelation, OCM admitted it had measured the distance between dispensaries and schools incorrectly—using entrance-to-entrance measurements instead of property-line-to-property-line, as clearly required by law.
What’s the impact? Over 150 licensed dispensaries and applicants—more than half of which are in New York City—now find themselves out of compliance with the rule requiring a minimum 500-foot buffer from a school. Among those, approximately 60 businesses are already open and operating, many of them mere months away from renewal deadlines. Without a change in the law, they face a grim and costly choice: break leases, relocate, or shut down.
Section 72(6) of the MRTA is unequivocal: a dispensary may not be located within 500 feet of school grounds. And the Education Law goes further, defining school grounds as the entire legally recorded property—buildings, grounds, and all. OCM’s misreading—measuring door-to-door instead of line-to-line—isn’t just a bureaucratic oversight; it’s a massive blunder with real-life consequences.
To their credit, OCM leadership acknowledged the error and announced a proposed legislative fix. But that fix won’t be introduced until January 2026—far too late for dozens of businesses staring down the barrel of lease obligations and license renewals. And even if the bill passes, there is no guarantee it will apply retroactively to all 152 affected entities.
Adding insult to injury, OCM’s offer of a $15 million relief fund—capped at $250,000 per business—is unlikely to come close to covering the sunk costs or future burdens faced by these businesses, especially those that invested heavily in securing, building out, and staffing their locations under OCM’s prior guidance.
Now, those seeking new locations must navigate the already byzantine buffer rules—at least 1,000 to 2,000 feet between dispensaries depending on local population—without knowing which current dispensaries are non-compliant and might be shut down. This uncertainty will stall site selection, inflate real estate costs, and further delay the market’s stabilization.
So what’s next?
If you are an applicant or licensee, do not assume OCM’s current conclusions are correct. Measure the distance yourself—accurately. Verify whether the nearby school or house of worship is properly recorded with the County Clerk. And if you’re at risk of losing your location, start compiling detailed records of all your expenses and damages—because you may be entitled to reimbursement, and you must be prepared to fight for it.
This is yet another example of how a lack of clarity and consistency in regulation hampers not only the legal cannabis market’s growth, but the entrepreneurial dreams of those trying to build something real, sustainable, and above all—compliant. The cannabis industry cannot afford to operate on shifting sand.
We are monitoring the situation closely and are available to assist any operators or applicants affected by this latest debacle. If you’re among the 152, you’re not alone—but you do need a plan.
Joshua S. Bauchner is a Partner at Mandelbaum Barrett PC and Chair of the Cannabis & Psychedelics Practice Group. He represents cannabis licensees and applicants across the country, with a focus on regulatory compliance, litigation, and government relations.