Licensed NYC pot shops sue state in turf war over competition

Four licensed city pot shops have sued the state, claiming its cannabis regulators broke the law by not protectcing their turf.

The law says licensed shops can’t be located within 1,000 feet of each other in the Big Apple, a regulation designed to limit competition.

Waivers to the buffer zone are only allowed for “public convenience and advantage” based on strict criteria, an exception that regulators apparently relied on in granting the other licenses. 

The civil complaint was filed in the Manhattan state Supreme Court on Thursday by the licensed marijuana merchants operating in Manhattan and Brooklyn: Actualize Dispensary Inc.,  Astro Management Inc., L.O.R.D.S. LLL, and R&R Remedies.

The legal sellers claim Albany bureaucrats blew smoke at them with their empty promises and are now costing them dough — and possibly their livelihoods — by approving waivers for competitors within the zone “without notice, analysis, public discussion or due process.”

The waivers to permit other cannabis stores to locate within the 1,000 buffer “will divert customers and diminish sales, jeopardizing petitioners’ ability to pay exorbitant rent and other financial obligations,” the suit says.

The state Office of Cannabis Management — overseen by Gov. Kathy Hochul — and the Cannabis Control Board are listed as defendants.

“The Public Convenience Waiver recently issued by the CCB to an applicant seeking to open a dispensary in a location less than 1000 feet from Astro Management’s already proximity-protected location has put our company in an untenable position, endangering its viability as a business when we are only weeks away from launching,” said Jillian Dragutsky, CEO of Astro Managemen, which is located at 292 Atlantic Ave., Brooklyn.

“It’s as though the rug were pulled from under us without notice or reason.”

The Cannabis Control Board approved another weed seller, Buzzy’s, to operate at a site 956 feet away from Astro’s dispensary, the lawsuit said.

There are now 283 licensed cannabis shops in the state, and regulators expect that number will more than double to 625 by the end of 2025.

After a slow rollout caused by backlogs and other litigation, cannabis industry insiders are now bullish that New York’s legal pot market is about to take off.

However, many of the current pot licensees are concerned that allowing too many waivers to the 1,000-foot buffer zone will lead to oversaturation of cannabis shops, triggering business closures.

Thirty-eight other licensees have signed affirmations in support of the lawsuit, including; Conbud, Housing Works Cannabis Co, Terp Bros, Flowery Soho, Trends, Five Boroughs Cannabis, The Travel Agency Union Square, and Alta Dispensary.

“The CCB continues to act with capriciousness and in violation of its own proximity regulations,” said Osbert Orduña, CEO of The Cannabis Place dispensary in Middle Village, Queens, and co-chair of the Service Disabled Veterans in Cannabis Association and the National Hispanic Cannabis Council’s tri-state chapter.

“By arbitrarily issuing waivers, these governmental organizations are undermining the very communities they claim to be supporting. We are asking for the CCB and OCM to be true to their originally stated intention to provide opportunities for various classes of licensees.”

Before the first legal cannabis store opened in New York, lawmakers recognized the need to avoid clustering dispensaries and over-competition, hence the 1,000-foot distance requirement.

Maintaining distance between pot stores is vital because there are still many illegal stores selling weed, despite a massive crackdown on the black market last year, cannabis industry advocates say.

Waivers from the 1,000 buffer zone are supposed to be rare, they argue.

“Decisions recently made by the CCB to violate the proximity protection of several cannabis retailers can undermine the ability of those stores to survive,” said Britni Tantalo, President of the New York State Cannabis Retail Association.

She said there should be a much more rigorous process to justify waivers and that the state Liquor Authority’s rules for bars and liquor stores are a good model to follow.

The OCM said Friday it does not comment on pending litigation.