After trying to open a legal cannabis dispensary in New York for three years, Nubia Ashley was close to achieving her goal, possibly as soon as this month.
Then on Monday, she got an email from the state’s cannabis agency admitting that it had made a significant error.
The agency, which had approved her store’s location in March, said the address was closer to a nearby school than the 500 feet allowed by state law. It was the agency’s fault that the distance had been measured incorrectly, the email said, but Ms. Ashley would need to move.
“I’m trying to remain as positive as I possibly can because I was like this close to open, just so close,” Ms. Ashley, 37, said. “And then I get hit with this letter.”
The jarring message was a result of a sudden policy shift that threw the future of more than 150 existing and planned dispensaries into question. Regulators had previously measured the 500-foot distance from a dispensary’s entrance to a school’s. But on Monday, officials said the distance should have been measured from the school’s property line.
An intense backlash from some license-holders, lawmakers and former regulators followed. They questioned why Gov. Kathy Hochul’s administration had made such an abrupt change that could hurt people who followed the state’s rules. Several lawsuits are in the works that could ultimately cost New York taxpayers millions of dollars in damages.
The move also injected fresh turmoil into the state’s cannabis rollout just as it was on an upswing, with 444 dispensaries open and sales for the year estimated to reach $1 billion as of August.
The owners affected by the measurement change are mostly people of color whose applications for dispensary licenses were given priority because they had been punished under New York’s earlier anti-marijuana laws, a central aim of the 2021 law that legalized recreational marijuana. To open their businesses, they have endured years of policy changes, crippling lawsuits, shady investors and daunting searches for suitable storefronts.
Felicia A.B. Reid, the acting executive director of the cannabis agency, the Office of Cannabis Management, said an internal review had revealed that officials had misinterpreted state law in determining how to measure the distance between a school and a proposed dispensary.
“This was a difficult but necessary decision to bring the office’s practices into full alignment with cannabis law,” she said.
Ms. Hochul, at an unrelated news conference on Friday, said the agency’s previous leaders had erred in adopting a standard that applied to liquor stores but that was inconsistent with the cannabis law. She said she did not think anyone should be punished for the mistake and that she would ask the Legislature to change the law so the dispensaries could stay put.
The idea of measuring the 500-foot buffer zone from a school’s property line had been proposed in 2022, but regulators altered the standard in response to concerns that New York City would be left without enough stores. The change was detailed in revised regulations issued in May 2023 that had to be reviewed by the governor’s secretary, her counsel and the state budget director before they were adopted.
“Unequivocally, there was a massive change,” Jason Klimek, a cannabis lawyer, said. “If the governor’s office was reviewing the regulations, they should have definitely seen that.”
Sam Spokony, a spokesman for Ms. Hochul, a Democrat, said she wanted the Legislature to act to protect licensees from “future legal threats.” He did not elaborate.
State Senator Liz Krueger, who sponsored the bill that legalized recreational cannabis use in New York, said in an interview that she was perplexed by the administration’s decision to sound alarms before consulting lawmakers. The problem sounded easy to fix, she said, and it was unclear why it had suddenly become an issue.
“I wrote the law and I’m not sure that you did make a mistake,” Ms. Krueger, a Democrat, said, referring to the cannabis agency. The next session begins in January.
Crystal Peoples-Stokes, the leader of the Assembly’s Democratic majority and a main sponsor of the legalization law, said she saw nothing wrong with how regulators had applied the 500-foot rule. Lawmakers had given the cannabis agency broad authority to interpret the law as it saw fit to accomplish the goal of creating a robust market, she said.
State officials said that no dispensaries would be forced to move before lawmakers had a chance to act. The governor’s office said on Friday that 44 stores like Ms. Ashley’s that were in the process of opening could wait for lawmakers or apply in September for up to $250,000 in relocation grants.”
Officials have said the affected dispensaries that are already open can continue to operate while the issue is decided. Still, the change carries considerable risks for those with expiring licenses. A valid license, good for two years, is necessary to buy products, obtain insurance coverage, use bank accounts and hold leases.
The affected dispensaries include Housing Works Cannabis in Manhattan, which opened in 2022 as the state’s first licensed outlet, and Budega NYC, which opened in Brooklyn in June. Eight of the shops, including Gotham Buds in Harlem and William Jane in Ithaca, opened under a state-backed loan fund that Ms. Hochul championed. Two were originally medical dispensaries that opted into recreational sales.
“We’ve served our community, paid taxes, created union jobs and supported Housing Works’ broader mission,” said Matthew Bernardo, the president of Housing Works, a nonprofit serving people with H.I.V. and AIDS. He added, “To be told that we may have to relocate — through no fault of our own — is deeply unsettling.”
Officials have offered owners of dispensaries that have not opened $250,000 to help offset the cost of moving. But it was unclear when the money would be available.
Britni Tantalo, the president of the New York Cannabis Retail Association, a trade group, said the money would be helpful but hardly enough to cover the cost of moving. That is if shop owners can find anywhere to go, she said.
A dispensary also cannot be within 200 feet of a house of worship or, in cities, within 1,000 feet of another dispensary. Although there are many vacant retail spaces in New York, she said, most do not meet the requirements for dispensaries, landlords charge high rents for those that do and the competition is fierce for those that are available.
“We don’t have the upper hand in real estate,” said Ms. Tantalo, an owner of the Flower City Dispensary near Rochester. “So to even be able to say, hey move, it’s not that easy.”
When Suzanne Furboter, 55, and her husband, Fernando Peña, 56, learned that his 2003 conviction for marijuana possession made them eligible to open one of the state’s first licensed dispensaries, they took a chance.
Last year, Ms. Furboter and Mr. Peña opened Late Bloomers NYC in Queens by taking advantage of the loan fund promoted by Ms. Hochul, thinking they would run the shop until they retired. But the program saddled some participants with overwhelming debt, and was halted after helping to finance 22 stores, well short of the 150 originally planned.
Mr. Peña said the couple had been able to make their loan payments and live comfortably with their cats. But Ms. Furboter said that if they could not stay where they are, they did not know if they wanted to start over.
“It’s very, very uncertain,” she said, “and I’m tired of living this way.”
Ashley Southall writes about cannabis legalization in New York.
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