Zoning & NY’s MRTA

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Land use, particularly zoning, will likely be one of the fiercest battle grounds for implementation of New York’s Marihuana Regulation and Taxation Act (MRTA). Zoning powers are vested in the state’s cities, towns, and villages per the Statute of Local Governments. And while the exercise of such powers is subject to state and federal law, it is also subject to the individual discretion (and, thus, biases, whims, and otherwise unreasonable inclinations) of local government officials. These local decisions are then enforced by what are commonly known in the public policy world as “street-level bureaucrats,” a category which includes code enforcement officers, among others, who also have the ability to exercise a certain amount of discretion in their decision-making on the ground.


While municipalities cannot expressly discriminate against cannabis operations through strategically tailored zoning ordinances or enforcement decisions, they can limit certain operations and activities to specific areas of the municipality through general regulation of an entire category of land use. Unless municipalities have a rational basis for expressly discriminating against cannabis operations, such as a public health, safety, or welfare concern, they cannot treat cannabis use differently than other industries and zoning decisions cannot be inconsistent with state law. Discriminatory zoning laws also have the potential to violate the Fourteenth Amendment of the U.S. Constitution. Per the NYS Local Government Handbook:

It is not practicable here to review the many ways in which the Fourteenth Amendment limits and restricts the exercise of state and local power. Suffice it to say that in exercising the general power to make regulations for the …health, peace, morals, education, and good order of the people…” – the power known as “police power” – the state, as well as its local governments, must be careful to do so only in ways that do not contravene the “due process of law,” “equal protection of the laws,” and “privileges and immunities” provisions of the Fourteenth Amendment (Page 35).


With regard to retail operations, however, municipal governments can wield significant control. Per the MRTA: “…towns cities and villages may pass local laws and regulations governing the time, place and manner of the operation of licensed adult-use cannabis retail dispensaries and/or on-site consumption site, provided such law or regulation does not make the operation of such licensed retail dispensaries or on-site consumption sites unreasonably impracticable as determined by the board,” (MRTA,§131).


Broadly speaking, there are several potential types of cannabis-related land uses and many municipalities are going to have to conform their current zoning ordinances to the state law after the passage of the MRTA. Below are several general categories which could correspond to associated cannabis industry operations:

  1. Agricultural (outdoor/mixed-light cultivation)

  2. Industrial (indoor cultivation, processing, extracting, manufacturing)

  3. Commercial (retail)

  4. Entertainment (on-site consumption)

But as New York municipalities work to re-evaluate their zoning ordinances and make decisions in real time regarding certain sites following the Empire State’s adult-use legalization, let’s look to more mature markets in other states for some perspective.



Other States & Cannabis Zoning


Illinois

Illinois prohibits local governments from regulating cannabis except when the Cannabis Regulation and Taxation Act specifically allows it, but the State itself has exclusive power in regulation and licensing. Section 55-25 of the Cannabis Regulation and Taxation Act allows local governments to enact restrictions on businesses based on “time, place, and manner” much as New York does. While municipalities have the power to “prohibit or significantly limit a cannabis business establishment's location,” they are explicitly barred from using zoning ordinances to justify banning cannabis outright just because they want to. Importantly, there is no deadline for when municipalities have to opt out of having cannabis in their areas. (More specific details are laid out here).


Municipalities are allowed to enact “reasonable zoning restrictions” against licensed cultivation centers, craft growers, processing organizations, and dispensaries. Moreover, voters in any precinct within a municipality that has a population greater than 500,000 residents may petition (needing more than 25% of registered voters in the precinct) to have an ordinance to establish the precinct as a “restricted cannabis zone,” which would prohibit home cultivation, cannabis business establishments, or both. However, what a “reasonable restriction” is not completely clear, and it is up to the municipality to decide what they deem “reasonable.” See below in the Massachusetts write up for what “reasonable” may mean.

The strongest example of Illinois’ system in practice is Chicago’s Cannabis Zoning Ordinance, adopted in 2019 by the Chicago City Council. It splits the city into seven geographical cannabis districts, with a cap on dispensaries in each district and prohibition on sales within 500 feet of a school and 1,500 feet of another dispensary. Any business which wants to open in Chicago must hold a community meeting in the ward of their proposed location, in addition to obtaining a special use permit from the Zoning Board of Appeals. But according to G&G Law, LLC, the special use permit application process is “arcane, intricate, and time-consuming,” including steps such as receiving an “official denial” of another permit, among other demanding steps. Perhaps the number of hoops to jump through there is too high.


California

California’s cannabis zoning laws are an even more complex patchwork, as regulations allow cities and counties to regulate land use and zoning based on location and type of business activity. Moreover, each city and county customizes its own cannabis zoning laws, so different types of businesses have to abide by different laws in each different area.

But California, in giving flexible power to municipalities, still did not avoid confusion and controversy.


For example, in 2019, twenty-four California cities sued the California Bureau of Cannabis Control, arguing that regulations which allowed transport and delivery of cannabis through a municipality which had otherwise banned cannabis, went against the intent of the law itself, which had allowed localities to ban marijuana establishments within their borders. Ultimately, the court dismissed the case and found that deliveries were still permitted. That same year, a retailer sued Santa Cruz county for their attempts to ban deliveries in its area, and California Attorney General Xavier Becerra (now Secretary of the Department of Health and Human Services) even filed a motion for the state of California to join the lawsuit against Santa Cruz, writing that CA’s delivery regulation "is critical to the state’s commercial cannabis market and valid."


It should be clear from this experience that municipal authorities will fight tooth and nail to ban cannabis if they so feel like it, regulations be damned. An Assembly Bill was amended to give municipalities the power to actually ban transport, but the bill was never passed.


Massachusetts

Massachusetts allows for cities and towns to adopt their own ordinances and zoning laws with “reasonable safeguards.” A 2018 guidance from the Massachusetts Cannabis Control Commission states that municipalities can have their own licensing process for canna-businesses, just so long as they do not conflict with state laws. Massachusetts allows but does not require municipalities to pass bylaws and ordinances regarding “time, place, and manner” of canna-businesses, which may not be “unreasonably impracticable,” i.e., they cannot be “so difficult to comply with that they would subject licensees to unreasonable risk, or require such a high investment of risk, money, time or any other resource or asset, that a reasonably prudent businessperson would not operate a marijuana establishment.”

Municipalities are a bit more restricted in Massachusetts, as they are barred from prohibiting the conversion of a medical dispensary to an adult-use dispensary, they face hurdles in the process of capping marijuana establishments, and like in California they are prohibited from banning the transportation of products.


Massachusetts has not avoided lawsuits. In one 2019 case, a group of Town citizens and property owners were unhappy with the Town allowing certain businesses, and took steps to reverse the decision. They passed a new bylaw to reverse the decision and ban the businesses, but the Land Court decided that they could only do so through a zoning bylaw and not a regular bylaw. It is these kinds of crucial legal distinctions that are make or break for many businesses, and it is like this in every legal state.



Land Use and New York’s Adult-use Cannabis Future


The future of the Empire State’s cannabis market is still largely uncertain, lacking, as it currently does, a fully appointed Cannabis Control Board (CCB) and fully staffed Office of Cannabis Management (OCM) at the state level. And while it is important to monitor state level proceedings to understand market development, one must not forget that local powers and decisions will play an enormous role in shaping that market as well, perhaps most prominently, through land-use decisions—for good or ill.