If anything should be easy to find amid the skyscrapers of New York City, it should be storefront real estate for new businesses.
There’s a roughly 11% vacancy rate, according to a November study from the Department of City Planning, but despite that, hopeful marijuana dispensary owners say their searches for viable real estate has been brutal and costly.
The quest for marijuana dispensary real estate in New York City over the past three years has been littered with unexpected lawsuits and court orders that have stalled both the licensing process and sown confusion for businesses on which locations may be workable for dispensary sites.
It’s put law-abiding entrepreneurs behind the eight ball, while allowing their unlicensed competitors to get a serious head start.
As of May 2025, three separate court-ordered preliminary injunctions have thrown wrenches into the works for New York City dispensary owners and licensees, and at least one lawsuit is still pending, which could add further complications to the mix.
Factor in the still-thriving unregulated market — which accounts for the vast majority of New York City’s marijuana retail presence, with likely several thousand unlicensed storefronts — and it means a serious lag in both the legal market rollout and the chances of success for licensed shops. Illegal shops outnumber legal ones by a factor of around 10 to one, despite crackdowns by both the city and state governments, and it’s not very easy for the average consumer to discern which are which, let alone to convince landlords to enter into lease agreements.
“New York had a proliferation of illicit shops, so for the folks who aren’t closely paying attention to this, the first thing you have to explain is, ‘We’re legal, we’re doing this the right way,’” said Aaron Ghitelman, former communications director for the New York Office of Cannabis Management (OCM). “That was one of the big complaints with the illicit shops, was there were some neighborhoods in which every other store was a smoke shop.”
Multiple legal delays
In November 2022, a court order interrupting marijuana licensing was issued by a federal court in Albany, which forced the OCM to suspend dispensary permitting in several specific regions of New York. The ruling included Brooklyn, Jessica Naissant’s first choice of the five boroughs for her planned cannabis shop, Renaissant.
The preliminary injunction lasted until May 2023, but for half a year, the agency was prohibited from permitting any dispensaries in Brooklyn and parts of upstate New York.
“That was a huge issue,” Naissant said.
Naissant finally got a conditional adult use retail dispensary (CAURD) license that July after the first injunction was lifted, following a settlement between the New York Office of Cannabis Management and the plaintiff.
Then in August of 2023, a second preliminary injunction was issued by a new lawsuit, this time halting all retail permitting by the OCM statewide. That court order remained in place until December that year, by which point the OCM had already moved on to accepting dispensary applications from anyone who wanted to open a cannabis business, not only social equity candidates like Naissant.
“A lot of people lost their real estate in that period,” recalled Ellis Soodak, another CAURD licensee who won an early retail permit in New York City. Soodak said many dispensary hopefuls didn’t have the money to keep paying rent while it was a total question mark as to when or whether licensing would resume.
More recently, a new court injunction issued in December 2024 in a case brought by dispensary Organic Bloom has prevented the OCM from awarding additional CAURD licenses or provisional dispensary permits, which are retail licenses applied for without real estate. That lawsuit is still pending, and could result in even more turmoil for the New York market depending on its outcome.
Proximity protection woes
Another hurdle that has befuddled many hopeful dispensary owners is the so-called “proximity protection” policy that was fleshed out by the OCM in 2023, which gives a 1,000-foot radius of legal zoning protections from competitors to dispensaries on a first-come, first-served basis.
The policy allows for dispensary applicants and licensees to secure dispensary sites and then register them with the OCM in order to prevent any other dispensary from setting up shop within 1,000 feet of their location as the crow flies, and an online map of locations that have been granted proximity protection was debuted by the OCM two years ago.
But the proximity protection plan hasn’t worked out the way it was intended, multiple attorneys told Crain’s, and has resulted in at least two lawsuits filed thus far against the OCM, with possibly more to come.
Cannabis attorney Jeffrey Hoffman, who’s been helping clients navigate the licensing process for years, told the CCB at its May 20 meeting that two of his clients – a woman named Janice McDaniel and her son Rakeem who live in Brooklyn – won both a dispensary permit and proximity protection in March this year, only to be notified by the OCM in early May that the site protection was issued in error and was being revoked.
That, Hoffman said, put his clients in a major bind because they’ve already signed a 15-year lease, which they may now be forced to break at their own expense. He said his clients are considering legal action against the OCM over the situation.
“This is going to be a real challenge. We’re going to have to figure out what the OCM, what they’re going to want to do here,” Hoffman said. “I hope they’re going to want to work with us, because if not, it’s going to be a lawsuit, and I don’t think it’s going to be a lawsuit that’s going to work out very well for them.”
Hoffman said that particular situation isn’t an outlier either, but indicative of more systemic problems with OCM errors during the licensing process. He said he’s aware of several other license applications that have been “incorrectly voided” and have yet to be fixed by regulators.
Naissant said that during 2022 and 2023, before the proximity protection policy was fully implemented, it was fairly common for CAURD licensees like her to submit dispensary sites to OCM for approval after signing leases, only to be told that a competitor had already submitted a nearby location within a thousand feet. That, Naissant, forced a lot of her dispensary peers to continue their expensive search.
“Ultimately, a lot of people spent thousands of dollars on locations they couldn’t keep. It’s just so unfortunate,” Naissant said. “This is not anything that is rare, unfortunately. It has happened so many times over.”
Zoning exemptions create controversy
Another divisive aspect for dispensary stakeholders is new zoning exemptions, which have become increasingly common since the OCM began granting them last year to new dispensary licensees, to the chagrin of existing cannabis shops.
The exemptions, known formally as public convenience and advantage waivers, allow for new dispensaries to set up shop regardless of the thousand-foot buffer rule, including in New York City, based on the idea that population density in the city calls for more than a single marijuana seller in certain neighborhoods.
The move resulted in immediate pushback from stakeholders, including the New York Cannabis Retail Association (NYCRA), which is lobbying lawmakers to reverse the policy.
“Our number one priority is to establish proximity protection guardrails,” said Jayson Tantalo, cofounder of NYCRA and a dispensary owner in Rochester. “What we find to be the most troubling and disturbing aspect (about PCA waivers is) … they’re granting people the ability to infringe upon retailers.”
The PCA waivers have divided the industry, with some stakeholders calling for more such exemptions to be granted — particularly in densely-populated New York City — while others argue that the waivers are a direct contravention of the social equity spirit of the 2021 law, which legalized recreational marijuana.
The latter camp argues that if more and more retailers are approved by regulators, it’ll undercut the valuable market share garnered by social equity shops like Soodak’s and Naissant’s, while the former asserts that dispensary owners shouldn’t be afraid of old-fashioned free market competition.
“Everyone acts like there’s no space left and we have to cut proximity protection to 500 feet. That’s suicide for the industry,” Soodak said, adding that he recently won approval from OCM for a third dispensary in Manhattan. “There are still a ton of compliant locations.”
Naissant said she’s worried that the CCB is issuing so many PCA waivers that it’ll kill chances for social equity companies like hers to succeed.
“As a CAURD licensee … we were not able to submit locations for proximity protection. It didn’t even exist when we initially submitted that first application,” Naissant said. “This is the comedy behind proximity protection: something that didn’t exist … is now inhibiting on our ability to do as well as possible, because there are new people in the game, bigger money that’s now coming into the industry, and so many waivers are being granted.”
Rudick, however, countered that there are still thousands of potential dispensaries yet to be licensed, and said there’s never been a strict license cap imposed by New York precisely because it’s intended to be a competitive market.
“These are people who are just, they’re very happy to enjoy their early market share and they want to close the door behind them,” Rudick said, adding that she expects regulators to continue issuing PCA waivers, but that it’ll “depend on who’s got the lobbying dollars and who’s going to be able to influence OCM on this, and who’s going to sue OCM over it.”
The OCM declined to comment for this story — including regarding questions about how many dispensary applications are left to be reviewed — but a spokesperson noted that the agency is considering various changes to the PCA waiver process, and expects to finalize new rules sometime this summer.
