United States: With Opt-Out Deadline Past, What's Next For Municipalities Weighing Cannabis Retail?

December 31, 2021 was a critical date for municipalities weighing the decision to allow cannabis retail dispensaries and consumption sites on their turf.

Under the Marijuana Regulation & Taxation Act (MRTA) legalizing adult-use/recreational marijuana last year, towns, cities, and villages in New York State had until the end of 2021 to opt out of having licensed marijuana retail dispensaries and/or on-site consumption lounges within their jurisdiction. With many cities, towns and villages pointing to a lack of guidance from the state's Office of Cannabis Management ("OCM"), of the state's 1,521 municipalities, 758 have opted out of retail dispensaries and 862 have opted out of consumption lounges.  See the Rockefeller Institute's Municipal Opt-Out Tracker.

Declining to "opt out" of permitting one or both cannabis retail types effectively entered a municipality into the retail market (though did not guarantee a dispensary or lounge within its borders as the OCM has not announced, as of this date, the number of licenses to be made available). To opt out, a municipality needed to pass a local law before the end of the year exerting their authority under MRTA to prohibit cannabis establishments. These local laws were subject to "permissive referendum": if residents in a municipality disagreed with the decision to opt out, they could petition for a special election in which voters can decide whether to override the opt-out (generally speaking, 45 days after adoption of the town or city local law and 30 days in the case of Villages).

If the municipality failed to opt out by December 31 then under MRTA retail dispensaries and consumption sites are permitted. Conversely, municipalities that opt out have the option to opt in at a later date.

Perhaps most importantly, any town, city, or village that failed to opt out by the December 31 deadline may not later prohibit retail dispensaries and consumption sites. However, municipalities that chose not to opt out can still adopt local laws and regulations governing the time, place and manner of the operation of the licensed retail dispensaries and on-site consumption sites provided such local laws and regulations do not make such operation unreasonably impracticable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.