New York’s Cannabis Law and the Role of Municipalities

On Wednesday, March 31, Governor Cuomo signed legislation to make New York State the 15th state to legalize the production, sale, and use of recreational cannabis. We previously issued a LEGALcurrents (available on our website here) addressing key highlights and implications of this new law. While the production, sale, and use of cannabis will be largely regulated by the state under this law, municipalities play a role as well—from opting out of provisions authorizing certain establishments to imposing certain restrictions within the municipal boundaries. 

While municipalities cannot completely prohibit the production, sale, and use of cannabis within their boundaries, they do have the power to opt out of the specific provisions of the law permitting retail cannabis dispensaries and establishments for on-site consumption, thereby prohibiting such establishments within a locality. This right to opt out applies to any town, city, or village. In order to opt out, however, the municipality will need to adopt a local law by December 31, 2021, requesting the State Cannabis Control Board to prohibit “retail dispensary licenses and/or on-site consumption licenses” within its jurisdiction.  Any such local law will also be subject to permissive referendum, meaning that the local law may require voter approval as well.

Municipalities will not be able to opt out after December 31, 2021; however, those that opt out can later opt back in by repealing their original prohibition at any time.

Any town, city, or village that does not have a retail dispensary within its boundaries (by extension including those that have opted out) will not receive tax revenues related to the retail sale or transfer of cannabis products.

For municipalities that do not opt out, the regulation of any retail cannabis dispensary and/or on-site consumption establishment within their boundaries will be predominantly handled by the state. However, any town, city, or village may pass local laws and regulations governing the “time, place and manner” of such establishments so long as they do not make the operation of such establishments “unreasonably impracticable” – a threshold that will be determined by the State Cannabis Control Board. 

The statute’s use of the word “time, place and manner” seems to invoke the test developed by the United States Supreme Court for whether local zoning restrictions on adult film businesses violate the First Amendment.  See City of Renton v. Playtime Theatres, 475 U.S. 41, 46 (1986) (“The Renton ordinance . . . does not ban adult theaters altogether, but merely provides that such theaters may not be located within 1,000 feet of any residential zone, single- or multiple-family dwelling, church, park, or school. The ordinance is therefore properly analyzed as a form of time, place, and manner regulation”). If the New York State Legislature intended this coincidence, then it may have intended for localities in regulating cannabis shops to be informed by the case law concerning regulation of adult film businesses. However, we caution against weighing the coincidence too heavily because cannabis shops are not speech- or expression-oriented, and therefore the speech-related test may be inapposite.

If you would like more information on the legislation described above or its impact on local governments, please contact a member of our Municipal Law practice group at 585.232.6500 or 716.853.1616.

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