Marijuana shops sue New York after they were allowed to open too close to schools

Key Points

• A group of marijuana dispensaries in New York has filed a lawsuit against the state after regulators mistakenly allowed them to open within the prohibited distance from schools, jeopardizing their operations.
• The lawsuit seeks to secure the legality of the dispensaries' locations and prevent enforcement actions against them, following a regulatory admission of misinterpretation of distance requirements.
• Approximately 60 shops are currently operating under the incorrect measurement system, and the state has indicated a potential fund of up to $250,000 for relocation assistance for affected businesses.
• This issue highlights ongoing challenges within New York's legal cannabis program, which has faced numerous obstacles including managerial missteps and the rise of illegal shops.

ALBANY, N.Y. (AP) — A group of marijuana dispensaries in New York sued the state on Friday after cannabis regulators admitted they accidentally allowed pot shops to open too close to schools, putting the future of the businesses in jeopardy.

The lawsuit asks a state Supreme Court judge in Albany to rule that the marijuana shops' locations remain legal and to prevent the state from taking any enforcement action against them.

The case came a few weeks after the state's legal marijuana office told about 150 existing or proposed cannabis shops that regulators had been misreading a state law that requires dispensaries to be a certain distance from schools.

In the roughly three years since the state started licensing legal cannabis stores, officials have been meeting a requirement that dispensaries be 500 feet (152 meters) away from the nearest school by measuring the distance from the school's door to the door of the business.

The state now says the law actually requires them to measure from the school's property line.

About 60 shops were licensed and opened under the incorrect measurement system, state officials said, plus around another 40 that have licenses but haven't yet opened for business. Then there are almost 50 other businesses that have applied for licenses and are awaiting final approval from the state.

The dispensaries that are open have been told they can continue to do business for now and operate with expired licenses as long as they filed applications for renewal. The state has set up a fund where applicants can get up to $250,000 to help relocate.

The cannabis office said it is urging state lawmakers to craft a permanent fix to allow the businesses to remain in their current locations, but have also noted that it is not guaranteed. The state Legislature isn't set to meet again until next year.

A spokesperson with the state cannabis office declined to comment on the lawsuit, which was filed by a dozen businesses.

The school proximity problem marked the latest blow to the state's legal cannabis program, which has been plagued by managerial missteps that have stalled the market, led to legal challenges and allowed illegal shops to flourish.

There are around 450 cannabis dispensaries currently open in New York, according to the state.