152 NY Dispensaries Approved Then Screwed

^{Filed Under: State-Licensed Sabotage}

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New York’s cannabis regulators just detonated their own industry. On July 28, the Office of Cannabis Management admitted it has been measuring school buffer zones wrong since the program began. That is not a clerical error. That is a live grenade dropped on 152 licensed cannabis businesses, most of them social equity operators. The very people the state promised to help are now being lined up and shot in the foot because someone in Albany could not follow simple spatial instructions.

Here is the screwup. State law says dispensaries must be at least 500 feet from a school’s property line. The OCM was measuring from the entrance of the school to the entrance of the dispensary. As if that was ever acceptable under zoning law. Nobody noticed until Acting Director Felicia A. B. Reid ordered a compliance review. What her team found was catastrophic. Over a hundred stores were approved in locations that never should have passed review.

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“This was a difficult but necessary decision to bring the office’s practices into full alignment with cannabis law,” Reid said in a damage-control statement. “I recognize the impact this correction may have on licensees and communities, and I want to be clear: our success as a regulatory body is tied directly to the success of our licensees.”

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That is rich, considering 60 of those dispensaries are already open and operating, and 88 of them sit in New York City. All were cleared under faulty guidance and now face compliance risks during renewal or future inspection. When license renewals come up, most will be denied unless the law is changed. Licenses last for two years. The clock is already ticking.

The Office says 105 current licensees are affected, along with 47 pending applicants. That is 152 businesses told they may have to move or close. And we are not talking about speculative paper shops. These are real operations with leases, renovations, staff, and full inventory.

“This is devastating news that would force our business and dozens of others to permanently close,” said Jillian Dragutsky, co-owner of Yerba Buena dispensary. “These businesses have followed the rules, invested heavily, and are now at risk through no fault of their own.”

OCM tried to quiet the panic with a fifteen-million-dollar relief fund, promising up to two hundred fifty thousand dollars per licensee to help cover relocation or buildout costs. It is a bandage on a gaping wound. In New York real estate, that kind of money barely covers architectural renderings. And it only applies to those willing to abandon everything and start from scratch. Pending applicants are being told to move now or lose their shot entirely.

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This is not just a mistake. It is a betrayal of the justice-involved applicants and social equity operators this program was built to empower. These are people who were prosecuted under prohibition and told legalization would create pathways to ownership and wealth. Instead, they are being told to eat the loss because the state could not measure five hundred feet with a straight face.

Senator Liz Krueger is not buying the OCM’s spin either. “It is laughable for the governor to claim that she has righted the ship at OCM, when her own administration is breaking its own law,” she said, calling out the failure head-on., calling out the failure head-on.

Even conservative lawmakers are jumping into the fire. Assemblyman Ed Ra of Nassau County said, “This program has been a disaster from the start. Her administration cannot even follow a law properly to keep pot shops away from New York’s children.” That is the kind of line that sticks when the data is this damning.

OCM says it is working with affected licensees, offering technical help and exploring options to extend provisional licenses. But none of that erases the fact that this entire scandal was quietly brewing for Based on internal OCM documents and licensee interviews, awareness of the issue appears to have predated the public announcement by several weeks. Reid and her team knew this would explode. They tried to get ahead of it with soft press statements and vague policy language. It did not work. The damage is done. The trust is gone.

This is not about market forces or litigation. It is about raw incompetence. From delayed licensing lotteries to endless gray-market storefronts, New York has stumbled through every stage of this rollout. But this is the first time the state openly admitted its own approvals were invalid.

Every one of these dispensaries was vetted and approved by OCM. Everyone. The operators followed the rules they were given. They went legit. They put their names on leases, took out loans, hired staff, and opened doors. All based on guidance that now turns out to be meaningless.

If lawmakers do not fix this immediately and permanently, the fallout will gut what little progress New York has made. Senator Krueger is drafting a bill to allow currently operating shops to stay put and renew licenses, but it cannot even be introduced until January twenty twenty-six. That is six months of limbo in a state where six days without progress can kill a business.

If the bill fails, it is game over. The legal market becomes a punchline. The equity program becomes a soundbite. The people who risked everything to step into the light will be left holding empty bags while the state shrugs and moves on to its next public relations blunder.

You cannot regulate your way to justice if your regulators cannot read the rulebook.

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