Opening a cannabis business in New York involves more than licenses and capital, it requires careful attention to where you’ll operate. And in this state, location isn’t just important, it’s part of the licensing process.
At Seligson Law, we’ve guided cannabis entrepreneurs across New York through the complexities of New York cannabis zoning and leasing, including site selection, zoning compliance, and lease negotiations. Led by attorney Ken Seligson, our team brings deep regulatory insight and practical experience to help you avoid costly missteps before they happen.
Here’s what you need to know before locking in a location or signing a lease.
Why Location Matters More Than You Think
Under New York’s Marihuana Regulation and Taxation Act (MRTA), your cannabis license is tied to a specific location. That means you cannot complete your application, or open your doors, without having a viable site locked in.
But not just any property will do. The site must comply with both state requirements and local zoning ordinances. Choosing the wrong address could delay your license approval, or disqualify you entirely.
Understanding the Local Opt-Out Rule
Section 131 of the MRTA allows cities, towns, and villages to opt out of allowing retail dispensaries and on-site consumption lounges. While the deadline to opt out has passed, many municipalities still prohibit cannabis businesses within their borders.
Before you commit to a lease or purchase, confirm that your target municipality allows cannabis businesses. You can do this through the Office of Cannabis Management’s (OCM) municipal opt-out list or by contacting the local town clerk.
Zoning Laws: What They Control and Why They Matter
Even in areas that allow cannabis businesses, zoning laws dictate where those businesses can operate. Local zoning codes often regulate:
- Whether cannabis businesses can operate in commercial, industrial, or mixed-use zones
- Whether you need a special use permit or zoning board approval
- Building use classifications and code compliance for renovations
Section 86(4) of the Cannabis Law reinforces the role of municipal zoning in determining business location. Depending on the city or county, you may need to appear before a zoning board or apply for a variance, both of which take time and planning.
Leasing for Cannabis Use: What to Look For
A cannabis-friendly lease isn’t just about getting the keys. It’s about building legal protection into every clause. We’ve seen too many leases fall apart when landlords discover the regulatory requirements, or simply change their minds.
Key lease provisions to review with your attorney:
- Permitted Use Clause: Your lease must explicitly state that cannabis activity is allowed on the premises.
- Licensing Contingency: A clause that allows you to terminate the lease if your license is denied or delayed.
- Access Rights: Ensure you have full access to the property to meet OCM security and surveillance requirements.
- Landlord Acknowledgments: The lease should show that the landlord understands cannabis use and agrees to cooperate with compliance measures.
Any hesitation from the landlord, especially about disclosing cannabis activity, should be a red flag.
Avoid “Paper Leases” That Could Sink Your License
New York regulators are cracking down on “paper leases,” agreements signed solely to meet licensing application requirements, with no intention of actual occupancy. These can lead to license denials or future enforcement actions under 9 NYCRR § 116.3.
A legitimate lease should support a real plan to occupy and operate the business at that location. If your circumstances change, you must file an amendment with the OCM, ideally with guidance from legal counsel.
Structure Lease Terms Around Licensing Timelines
Licensing in New York can take months. That means your lease needs to work with, not against, your business timeline. When negotiating, consider:
- Rent deferral or phased payments until final license approval
- Options for early termination if your license is denied
- Clauses that allow rent adjustments based on regulatory delays or permit requirements
Be prepared for landlords to ask for higher security deposits or additional insurance coverage due to state law and federal restrictions, but know that many terms are negotiable with the right legal support.
Don’t Overlook Building and Fire Code Compliance
Even if your location is zoned properly and your lease is solid, you still need to comply with state and local building codes. Cannabis businesses are subject to the same or stricter inspections or usage standards.
Check for:
- ADA compliance (Americans with Disabilities Act)
- Fire suppression and emergency access
- HVAC systems for odor and air quality management
- Secure storage protocols for cannabis inventory
Conducting a building inspection early in the process can prevent costly retrofits later on.
Work With a Compliance-Focused Legal Team, Contact Us at Seligson Law Today
Zoning and leasing issues can derail even the most promising cannabis business. At Seligson Law, we help clients secure the right property, negotiate protective lease terms, and file the necessary documentation to keep licensing on track.
Before you sign anything, consult with our team of cannabis lawyers. We’ll walk you through your lease, zoning regulations, and licensing steps so you can move forward with confidence. Contact us at 213-293-6692 to get started today.
FAQs
1. Do I need to have a property secured before applying for a cannabis license in New York?
Yes. Under New York’s Marijuana Regulation and Taxation Act (MRTA), your license is location-specific. That means you must identify a viable, compliant property as part of your application. Without it, your submission will be incomplete and likely rejected.
2. How can I check if a municipality allows cannabis businesses?
You can use the Office of Cannabis Management’s (OCM) local opt-out list or contact the town or city clerk directly. Even if the state allows cannabis businesses, local governments have the authority to ban dispensaries and consumption lounges under MRTA § 131.
3. What makes a cannabis lease different from a regular commercial lease?
Cannabis leases require specific terms that account for regulatory compliance, such as explicit use clauses, licensing contingencies, landlord acknowledgments, and 24/7 access for inspections and security. Standard commercial leases often lack these protections.
4. What are “paper leases,” and why should I avoid them?
Paper leases are agreements signed solely to meet license application requirements without any real intent to operate at the location. These are strongly discouraged by regulators and could lead to license denial or compliance issues under 9 NYCRR § 116.3.
5. Can I break my lease if my cannabis license is denied or delayed?
Only if your lease includes a licensing contingency clause. This provision allows you to terminate or renegotiate the lease if licensing doesn’t go as planned, something that should be negotiated up front with legal guidance.
6. What building code requirements should I prepare for?
Depending on your business type, expect to meet local and state codes for ADA compliance, fire safety systems, ventilation, and secure storage. These can vary based on whether you’re operating a dispensary, cultivation site, or processing facility, so it’s essential to conduct a property inspection before signing anything.
