Southampton, Riverhead Will Sue New York State Over Cannabis Rules

Southampton and Riverhead towns will sue the State Office of Cannabis Management for infringing on the town’s home rule rights and overreaching, in the towns’ view, its power to limit a local municipality’s authority to regulate retail cannabis dispensaries through planning and zoning laws, similar to what other commercial businesses must follow.

The Southampton Town Board on Tuesday afternoon authorized the hiring of attorney John M. Wagner to commence legal action against the OCM and its Cannabis Control Board over its stance that the town’s zoning rules for cannabis stores violate the state Cannabis Law statutes created in 2021.

Earlier this month, the CCB declared that Southampton’s site plan process was unfairly restrictive on the new industry because it imposed requirements and fees on cannabis businesses that were not specifically detailed in the state legislation that legalized the sale of marijuana.

In particular, the CCB seized on the fact that cannabis stores are only allowed in two of the town’s zoning districts and that the “special exception” site plan process imposes extra compliance demands and an additional fee, beyond the normal site plan review process.

In doing so, the CCB took a strict reading of the state’s law, saying the town can only impose restrictions specific to a handful of logistical demands mentioned specifically in the state statute: hours of operation, parking, traffic control, odor and noise.

The interpretation from the CCB would seem to preempt the town from imposing other typical site plan components that all commercial businesses must comply with, like exterior lighting, landscaping and stormwater runoff control, and newer standards like requiring the installation of EV chargers.

The CCB’s ruling, by its own admission, was based only on the details of the town’s process provided to it by the two businesses that filed complaints with the CCB about the town’s permitting process and appeared to ignore an answering letter from Southampton Town Attorney James Burke’s office, which pointed out that dozens of businesses must comply with special exception site plan requirements, not just cannabis stores, and that the limitation of shops to certain zoning districts was something the state had said would be in a town’s powers to regulate “time, place and manner,” as the legislation put it.

The town’s attorneys have said that they crafted the town’s laws in lock-step with the state’s rules and the spirit under which the state adopted the Marijuana Regulation and Taxation Act and has been guided by OCM officials throughout.

The town says that the CCB ruling appeared to make incorrect assumptions about the rules that were being applied to cannabis shops in some instances and stepped on the state’s home rule rights for local municipalities in ways never intended by the wording or the spirit of the legislation passed by the New York State Legislature in 2021.

“If you look at what was previously published by OCM in its guidelines, and how the CCB is interpreting it now, it’s inconsistent,” Burke said. “It talks about localities and what they are allowed to do. It glaringly does not say you can only do what is listed in Section 119.2.

“Initially, OCM was saying you could do time, place and manner restrictions as long as they weren’t unreasonably impracticable. Now, CCB seems to be taking the position that unless its only what’s on that delineated list, it is unreasonably impracticable, period end of story.

“They’re making it up as they go along, frankly.”

Burke noted that most of the attorneys in the Office of Cannabis Management that had worked with lawmakers to draft the original legislation have left the department, and those who have followed have missed the spirit of what the legislature’s intent was.

Earlier this summer, a new acting director of OCM said that a legal review of the agency’s practices since the state began issuing retail cannabis licenses in 2022 found that its regulators had been grossly misinterpreting how the original legislation intended rules about separation of pot shops from schools be applied — resulting in more than 150 licenses having been issued for locations that should not have been eligible.

Town lawmakers said that no town would have agreed to allow cannabis sales if they’d been told that they would not be allowed to impose basic logistical, aesthetic and safety demands on a new business — especially one from an entirely new and untested industry.

“We have 65-plus uses that are subject to special exemption provisions — calling them ‘unreasonably impracticable’ was the last straw,” Southampton Town Councilwoman Cyndi McNamara said of the decision to sue. “The state’s complete disregard for home rule and our right to dictate time and place and manner should serve as a warning for any municipality currently thinking about opting in.”

Town Supervisor Maria Moore said the town’s laws were reasonable and have allowed cannabis dispensary owners to follow the site plan process like any other business would.

“We have confidence in our zoning code and do not think it is unreasonably restrictive,” Moore said. “Even with the license from the state, applicants still need to come to the town and get site plan approval. That is just fundamental.”

McNamara and Moore have been among the chorus of Town Board members who have come into office in the wake of the town’s decision not to opt out of cannabis sales and have said they wished the town had taken a different path. Moore said that among the legal positions the town takes in its coming suit is that the literal readings of the state’s statutes by the CCB is a drastic divergence from the spirit of the law adopted in 2021 and that if they rules for localities have been changed, or the guidance offered at the time so misleading, then the town should be able to revoke its allowance of cannabis sales.

“We think that since the regulations that have come out have substantially changed from what was originally proposed by the state, that we should be entitled to opt out going forward,” Moore said. She said that if the town did so, those dispensaries that have already been issued site plan approvals would be allowed to remain, as preexisting, nonconforming uses.

Southampton Town and Riverhead were the only East End municipalities to not opt out of the retail cannabis law in 2021 — with most declining to do so voicing distrust of the state’s ability to manage the industry and of the problems cannabis retail operators may pose in the community. The state’s laws regulating the industry were not yet in completed form until a matter of weeks before the deadline for opting out.

Jay Schneiderman, who was town supervisor at the time and was supportive of the town allowing retail cannabis sales, said this week that he would have steered the town to opt out if the state’s latest interpretations of the statute were understood to be the reality the town would have to operate under.

“We would not have opted in if we really had no language control about where they can go and what can be done,” Schneiderman said this week. “If we were told they would be exempt from any zoning, I mean, you gotta be kidding — who would ever say that is something good for the community.”

The former supervisor says the he thinks that eventually cannabis dispensaries will be seen as just another business and fears about their impacts and the town’s acceptance of them will broaden to the point that they will be treated more like liquor stores are now. But the understanding, he said, was always that the town would be allowed to approach it as gradually as it saw fit.

“Imagine if they said gas stations could just go wherever they want, or nightclubs, or even liquor stores,” he said. “The town will have to fight OCM on that one, and they should. The state is clearly overreaching on this.”

Former New York State Assemblyman Fred W. Thiele Jr. was the chairman of the legislature’s Local Government Committee when the Cannabis Law was adopted in 2021. He voted against it.

“I supported decriminalization of marijuana, I supported medical marijuana when that came through the legislature — but this bill, I saw trouble with from the beginning,” Thiele, who retired at the end of 2024, said this week.

The former lawmaker says he thought Southampton Town made a mistake at the time by not opting out in 2021, but that the regulations they created clearly meet what was presented as how towns would be allowed to manage the new industry within their borders.

“I certainly would side with the town. They were consistent with what was intended with the law and this is just another one of several problems the OCM has — look at how they screwed up the interpretation of the 500-foot rule for schools and the mess they created there.”

Thiele said he was especially distrusting of the specific statute empowering the CCB to interpret unilaterally whether a locality was regulating the industry fairly — something he said he has seen other state agencies wield in a decidedly lopsided way.

“Those departments view the law through the lens of what they do and always seem to have their finger on the scale on the side of the industry they are supposed to be regulating,” he said. “Watching what’s going on in Southampton, the law was set up for that.”

The CCB has also issued two advisory opinions that declared that Riverhead requirements violate the state law. A Suffolk County judge has struck down the town’s setback laws in two separate instances, saying they conflicted with superseding state law by doubling the required separation between a cannabis shop and from schools. The town plans to appeal, along with joining Southampton in the lawsuit against the state.

“We are happy to partner with our friends in Southampton to fight the Cannabis Control Board’s overreach of its legislative mandate,” Riverhead Town Supervisor Tim Hubbard told RiverheadLOCAL.com on Tuesday afternoon.

The arguments in the anticipated town lawsuit would parallel those in two separate lawsuits brought by two state cannabis license holders. One, Brown Budda, has been approved to open by the town but sued over the site plan process, claiming the delays in opening it caused cost the owners millions in lost revenue.

The other, brought by two brothers who planned to open in a Hampton Bays bank building, accuses the town of a coordinated campaign of stalling their application and then changing the zoning on the property to block them from being able to move forward.

To date, Southampton has approved site plans for four cannabis businesses to open — one in Bridgehampton, one in Water Mill, one in Southampton and one in Tuckahoe. Two other businesses have come to the town with proposals for new cannabis shops, in the Club Ultra building and in a former car club building in Tuckahoe.

One of them, Charlie Fox, opened last month without any town approvals, arguing that the state’s licensing had given them the all the permissions they needed. A county judge issued a TRO forcing the business to close again — and was due to review the matter again on October 15.