New York: Retail Siting, CAURD Legacy, Landlord Considerations

Executive Summary (TL;DR)

• New York cannabis retail siting hinges on state proximity rules (schools, houses of worship, spacing between dispensaries) and local zoning. Clarify these before you sign a lease or LOI.
• The CAURD legacy footprint still shapes neighborhood expectations, landlord risk tolerance, and timelines. Know what carried over—and what didn’t.
• Landlords should align leases with location approvals, build-out (TI), security, and Public Convenience & Advantage (where applicable) to protect both parties.
• Operators can compress time-to-open by packaging buffer maps, community-board engagement plans, and a financing model with conservative DSCR and TI contingencies.
• If you’re siting or repositioning a store, start with inventory: retail for lease on 420 Property.

Table of Contents

• New York Market Overview for Cannabis Retail Siting
• CAURD Legacy: What Still Matters in 2025
• Proximity, Spacing, and Local Control (what the rules say)
• Landlord Considerations: Leases, TI, Security, and Risk Allocation
• Due Diligence Workflow: Maps, Submittals, Community, Timelines
• Financing & Deal Structure: DSCR, Percentage Rent, Sale-Leaseback
• Myth vs. Fact (common mistakes)
• Seller & Buyer Checklists
• FAQs (New York–specific)
• Call to Action

New York Market Overview for Cannabis Retail Siting

New York’s adult-use rollout is accelerating, but site control remains the gating item. New York cannabis retail siting involves: (1) state proximity rules to schools and houses of worship; (2) spacing from other dispensaries; (3) local zoning and building code constraints; (4) community engagement; and (5) build-out realities (security, cash handling, HVAC, egress). In dense boroughs, a compliant address can be rarer—and more valuable—than pristine tenant credit.

Inventory turns quickly in viable corridors. To pressure-test your pipeline against live options, compare against retail for sale as well: prime retail buildings trading now. For a statewide lens, use our New York hub once in your journey to track regional momentum: New York listings overview.

Who should act:

• Operators ready to sign contingent leases and move to design/permits.
• Investors/landlords underwriting rent coverage and exit cap rates on stabilized dispensaries.
• Brokers packaging compliant sites with credible entitlement and neighborhood strategies.

Key terms (defined on first use):

• OCM — New York Office of Cannabis Management (state regulator).
• MRTA — Marijuana Regulation and Taxation Act (state law).
• CAURD — Conditional Adult-Use Retail Dispensary (legacy program cohort).
• CUP — Conditional Use Permit (New York often uses special permits/approvals instead; keep the concept for comparables).
• TI — Tenant Improvements (build-out).
• DSCR — Debt Service Coverage Ratio (lender coverage metric).
• C1D1 — Classified hazardous (Class I, Division 1) extraction room; relevant if you add manufacturing at a site.
• PCA — Public Convenience & Advantage (used by some jurisdictions during siting reviews).

Semantically related entities you’ll see throughout: zoning, special permits, community boards, TI, DSCR, C1D1 (if MFG), egress/ADA, security plan, neighborhood impacts, site logistics.

CAURD Legacy: What Still Matters in 2025

CAURD licensees seeded early retail supply, often in challenging real-estate contexts: compressed timelines, evolving proximity guidance, and financing frictions. That history still affects today’s transactions in three ways:

1. Expectations: Communities and community boards have a memory. Early CAURD entrances set baselines for operating plans (hours, line management, security, trash, deliveries). New applicants should meet—or exceed—those standards.
2. Landlord posture: Many owners learned to mirror OCM milestones in leases (location approval, architectural approvals, final license) with rent commencement triggers and termination rights. That structure remains best practice for any new cohort.
3. Data rooms: Buyers and lenders now expect a bundle: proximity/buffer maps, any PCA materials, DOB/FDNY status, and a schedule of TIs. With New York cannabis retail siting, competent documentation often determines rent and valuation, not just address.

Proximity, Spacing, and Local Control (what the rules say)

Why this matters: A perfect storefront with the wrong distance metric is a seven-figure mistake. New York cannabis retail siting must clear state proximity rules and any local siting requirements.

State proximity & spacing (high-level)

• Schools (public youth facilities/school grounds): Dispensaries must be at least 500 ft from school grounds (measured to the school property line, not just an entrance). Office of Cannabis Management+1
• Houses of worship: Dispensaries must be at least 200 ft from a building exclusively used as a house of worship (straight-line measurement). Office of Cannabis Management
• Dispensary-to-dispensary spacing: In municipalities with population ≥20,000, the minimum distance between adult-use dispensaries is 1,000 ft (subject to evolving PCA frameworks and local review criteria). Office of Cannabis Management

2025 refinement: OCM clarified that school distance is measured from the dispensary to the school property line. Prior informal guidance that referenced “entrance-to-entrance on the same street” has been superseded by the statutory reading and formal correction. Expect enforcement of the stricter interpretation. Office of Cannabis ManagementDuane Morris BlogsFoley Hoag

Local control & overlays

• Municipal opt-out/opt-in: While most opt-out decisions were made in 2021, municipalities can repeal opt-outs and participate later. Always validate local status before site control. Office of Cannabis ManagementBroome County
• Zoning & special approvals: Cities and towns may layer site-plan review, special permits, and PCA-style criteria (e.g., spacing, traffic, neighborhood compatibility). In NYC, community boards often provide advisory input that shapes approvals even when not decisive.

Practical siting implications

• Map first, negotiate second. Use current OCM datasets and municipal GIS to verify 500 ft to school property lines, 200 ft to houses of worship, and 1,000 ft to other dispensaries in ≥20k-population locales.
• Corner cases: Topography, waterways, and multi-frontage parcels complicate “as-the-crow-flies” measurements. If you’re near the line, commission a third-party survey and keep it in the data room. NYC.gov
• Contingencies save capital. Your lease should make rent commencement and non-refundable deposits contingent on location approval and any required local decisions.

Landlord Considerations: Leases, TI, Security, and Risk Allocation

Cannabis anchors behave like other credit tenants—but with higher regulatory friction. For landlords, the goal is control and clarity:

1) Lease structure

• Conditions precedent: Tie possession and rent commencement to OCM location acceptance, building permit issuance, and final license. Include outside dates and mutual walk-away rights.
• Use & compliance: Narrow permitted use (state-licensed cannabis retail and ancillary) and require compliance with MRTA/OCM rules.
• Assignments & change-of-control: Landlord consent should be reasonable but may require OCM approval; align with buyer workflows (LOI → APA → OCM notice/approval).
• Percentage rent (optional): Consider a low base with % rent as a bridge during ramp, then a step-up to market base rent once sales stabilize.

2) TI & code path

• TI responsibility: Allocate shell vs. tenant scope; require as-built drawings and a schedule of security upgrades.
• Security design: Access control, video retention, safes/vaults, cash-handling rooms, and secure loading. Coordinate with landlord systems without cross-defaulting other tenants.
• Life safety: Egress, sprinklers, and electrical loads (especially for larger footprints). If any C1D1 space is contemplated (e.g., microbusiness manufacturing), isolate in scope and approvals.

3) Risk & operations

• Insurance & indemnities: Match cannabis-specific coverages; confirm carrier appetite.
• Nuisance & queue control: Codify line management, odor, hours, deliveries, trash, and lighting.
• Default remedies: Include cure windows recognizing regulator calendars; avoid hair-trigger defaults for timing slips outside tenant control.

A disciplined process shortens time-to-open and makes capital cheaper.

Step 1 — Site screen & mapping

Step 2 — Lease/LOI with protective conditions

• Conditions precedent: OCM acceptance, building permits, fire/DOB approvals, final license.
• Outside date with automatic termination if approvals fail.

Step 3 — Community engagement

• Prepare a board-ready packet: security, queueing plan, hours, trash, loading.
• Capture letters of support when possible; document mitigations.

Step 4 — Design, permits, and procurement

• Lock security vendors early (lead times on vaults/cameras).
• Phase TI to enable inspections without rework.

Step 5 — Pre-opening

• Test SOPs (cash, ID checks, inventory).
• Staff training; dry-runs with line management.

Tip: Put your entire package—maps, approvals, TI schedule, vendor quotes—into a tidy data room. Buyers, lenders, and landlords will reward transparency with better terms.

Financing & Deal Structure: DSCR, Percentage Rent, Sale-Leaseback

Underwriting realities

• DSCR: Model at least 1.35–1.50x on normalized margins with sensitivity for price compression and enforcement shifts.
• TI & working capital: Budget for security, millwork, POS/ID hardware, signage (where permitted), and pre-opening payroll.
• Percentage rent: Useful in high-ramp corridors to align interests; remove once throughput stabilizes.
• Sale-leaseback: Recycles equity after stabilization; buyers will demand clean proximity compliance and transferable approvals to protect value.

For asset buyers/landlords

• Confirm proximity compliance under the 2025 measurement clarifications. Near-line sites carry regulatory overhang risk; reflect that in cap rate and reserves. Office of Cannabis Management

Myth vs. Fact (common mistakes)

• Myth: “NYC density makes the 500-ft school rule flexible.”
  Fact: The statutory 500-ft to school property lines is the controlling standard; do not rely on outdated entrance-to-entrance heuristics. Office of Cannabis ManagementFoley Hoag
• Myth: “Once OCM preliminarily accepts a location, the lease is safe.”
  Fact: OCM can revisit compliance; build location-approval contingencies and outside dates into your documents.
• Myth: “If the town didn’t opt out, it must approve my store.”
  Fact: Municipalities still apply zoning, site-plan review, and PCA-style criteria. Some that once opted out have since repealed; always verify current status. Office of Cannabis Management
• Myth: “Spacing only matters in Manhattan.”
  Fact: The 1,000-ft spacing rule applies in any municipality with ≥20,000 population, statewide. Office of Cannabis Management

Seller & Buyer Checklists

For sellers/landlords

• Parcel report: zoning, permitted uses, any special permits/PCA conditions.
• Proximity maps (dated): 500-ft schools, 200-ft houses of worship, 1,000-ft dispensary spacing where applicable.
• Parking/egress plan; loading and cash logistics.
• TI ledger and permit history; security as-builts.
• Draft lease with conditions precedent keyed to OCM and local approvals.

For buyers/tenants

• Independent proximity validation using current OCM interpretations. Office of Cannabis Management
• Community-board strategy and a concise operating plan (security, hours, line management).
• Budget: TI, soft costs, legal, deposits, contingency.
• Financing: DSCR ≥1.35x on conservative ramp; options for % rent or short-term abatements.
• Data room: Put every approval and drawing in one place to compress diligence.

FAQs (New York–specific)

1) What are the current distance rules?
At minimum: 500 ft from school property lines and 200 ft from buildings exclusively used as houses of worship; in municipalities ≥20,000 population, 1,000 ft between dispensaries (subject to PCA/local criteria). Always check the latest OCM updates. Office of Cannabis Management+2Office of Cannabis Management+2

2) Do community boards decide approvals?
They are typically advisory, but their feedback can materially influence outcomes. Treat them like a key stakeholder and arrive with mitigations.

3) How did CAURD affect today’s process?
CAURD set early patterns for security, lines, and neighborhood expectations. Many landlords now require location-approval contingencies and clearer TI scopes due to that experience.

4) Can municipalities that opted out in 2021 come back in?
Yes. They can repeal the opt-out and allow dispensaries later. Verify current status during diligence. Office of Cannabis Management

5) What if OCM rules change after I sign a lease?
Use change-in-law and location-approval clauses with mutual termination rights and deposit protections to avoid stranded capital.

Call to Action

Ready to advance from mapping to move-in? Line up compliant addresses and put your approval path on rails.

Disclaimer

This article is for educational purposes only and does not constitute legal, engineering, financial, or tax advice. Always consult qualified professionals and your local Authority Having Jurisdiction before making decisions.

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