How to Find Appropriate Real Estate for Your New York Cannabis Business

Vicente Sederberg LLP
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Vicente Sederberg LLP

So, you decided to start a cannabis business in New York. With the release of more license categories on the horizon, it’s an exciting and hectic time.

To help you prepare, VS’s New York team created an eight-part series of VS Insights to assist in navigating the path to applying for a New York cannabis business license. The series will cover essential topics for New York cannabis entrepreneurs, such as forming your business, preparing for the license applications, branding and trademarks, fundraising and investment, qualifying as a social equity applicant, communicating with municipal officials, and environmental requirements. Part three of the series focuses on a critical and complicated task: identifying appropriate real estate.

If you’ve formed your business and have a plan, the next two essential questions you might be asking yourself are real estate-related:

  • Where do I want to locate my business?

  • How do I identify appropriate real estate properties?

We put together some important considerations and things to keep in mind when looking for a property for your business operations.

The Type and Scale of Your Cannabis Operation Should Factor into Your Location Search

When performing an initial search for a property, it is important to keep in mind the type and scale of cannabis operations you plan on engaging in. A large cultivation facility obviously requires more square footage than other types of businesses like processing and retail dispensing. The potential for concerns about nuisances like odor, noise and light from cultivation and processing operations by nearby residents and businesses weigh in favor of locating such facilities in industrial or manufacturing areas away from residential and congested business areas. Furthermore, real estate costs increase as you get closer to larger municipalities. So, from a cost perspective, it may make sense to site a large cultivation facility in a more rural, agricultural area rather than near a big city where the cost per square foot is significantly higher.

Prioritize Convenient Access to Public Transportation and Parking

For retail dispensaries, it is also vital to prioritize convenient access and parking for customers. Proximity to public transportation (such as subway and bus stops) and sufficient parking for vehicles are critical. In our experience, concerns from municipal zoning boards and abutters about adequate parking and potential negative impact on nearby traffic can often result in a denial of a required land use permit. A retail dispensary should also have sufficient space and an appropriate floor plan for optimal customer flow.

Check Local Zoning Rules Before Committing to a Property

New York municipalities may pass local laws and regulations governing the time, place and manner of the operation of adult-use retail dispensaries and/or on-site consumption licensees, as long as the law or regulation don’t make operations unreasonably impracticable. For example, municipalities can pass laws and regulations on local zoning and the location of licensees, hours of operations, and adherence to local building codes.

Before committing to a particular property, it’s crucial to check the applicable zoning and proximity to potential offending uses (such as schools, daycares, churches, etc.). Additionally, you should ensure the property is in the correct zoning and/or overlay district and appears to meet the general criteria for issuing any required local land use permits.

Although some municipalities may be willing to grant variances from the zoning ordinance requirements in limited circumstances—for example, to reduce the buffer distance from a school or another marijuana business—such variances are rarely granted for marijuana businesses.

New York Municipalities May Opt Out of Allowing Cannabis Businesses

Finally, for retail dispensaries and/or on-site consumption licenses, you should confirm if the municipality you are looking at has opted out. If it has opted out, continue searching for properties in other areas that have not opted out. Remember, the municipality may be able to opt back in in the future by repealing the local opt-out law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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