Cannabis Local Opt-Out Provisions in New York

What the law actually says

New York Cannabis Law §131, enacted as part of the Marihuana Regulation and Taxation Act (MRTA) in March 2021, allowed any city, town, or village to pass a local law prohibiting retail dispensaries (adult-use retail) or on-site consumption establishments, or both, within its borders ^[1][2].

Key statutory features:

• Only cities, towns, and villages could opt out. Counties had no opt-out authority ^[1].
• The deadline was December 31, 2021, or nine months after the MRTA's effective date of March 31, 2021 ^[1][2].
• Failure to act = opt-in. Any locality that did not pass an opt-out law by the deadline is permanently opted in for adult-use retail and/or consumption sites ^[1].
• Permissive referendum. An opt-out local law is subject to a permissive referendum, meaning residents could petition to put it on the ballot ^[1][3].
• Reversibility is one-way. A municipality that opted out may later repeal the opt-out and allow licensees. A municipality that opted in cannot later opt out ^[1][2].

What localities could and could not opt out of

The opt-out applies only to two license types Strong evidence:

1. Adult-use retail dispensaries (Cannabis Law §72)
2. On-site consumption establishments (Cannabis Law §77)

Municipalities cannot opt out of:

• Medical cannabis dispensaries (registered organizations under the prior Compassionate Care Act framework) ^[2]
• Cultivation, processing, distribution, or laboratory licenses
• Personal possession, home cultivation, or personal use by adults 21+
• Cannabinoid hemp retail

This distinction matters: a town that opted out of retail dispensaries cannot prevent residents from legally possessing or growing cannabis at home, and it cannot block a licensed cultivator or processor from operating in an appropriately zoned area ^[2].

Local zoning vs. opt-out

Even municipalities that did not opt out retain authority to regulate the time, place, and manner of cannabis businesses through ordinary land-use law, provided those rules are not so restrictive that they effectively prohibit operation ^[1][2]. The Office of Cannabis Management (OCM) has stated that local regulations that make licensed operation unreasonably impracticable will be treated as a de facto prohibition, which the statute does not allow for opted-in jurisdictions ^[2].

In practice this means an opted-in town can:

• Limit dispensaries to certain zoning districts
• Set reasonable hours of operation
• Require setbacks from schools beyond the state minimums (within reason)

It cannot:

• Ban dispensaries outright through zoning
• Impose buffer distances that eliminate all viable parcels

Who opted out

By the December 31, 2021 deadline, a substantial share of New York's 1,520 cities, towns, and villages had opted out. Tracking by the Rockefeller Institute of Government and Cannabis Law NY found that roughly 700+ municipalities opted out of retail, on-site consumption, or both — a little under half of eligible jurisdictions ^[4][5]. Opt-outs were concentrated in suburban and rural areas, particularly on Long Island and in parts of the Hudson Valley and Western New York ^[4].

Major cities — including New York City, Buffalo, Rochester, Syracuse, Albany, and Yonkers — did not opt out ^[4][5].

Since then, a steady trickle of municipalities have repealed their opt-outs, often after seeing tax revenue flow to neighboring opted-in towns. The Office of Cannabis Management maintains a current opt-out registry ^[2].

Tax revenue consequences

Under Cannabis Law §492 and Tax Law §493, adult-use retail sales carry a 13% combined tax (9% state + 4% local). Of the 4% local share, 75% goes to the municipality where the sale occurred and 25% goes to the county ^[1][6].

A municipality that opted out collects zero of the local excise tax on adult-use retail sales — though the county it sits in still receives its 25% share from sales elsewhere in the county ^[6]. This revenue dynamic has been the single most-cited reason cited by town boards reconsidering opt-out decisions ^[4].

How a municipality reverses an opt-out

A municipality that opted out may repeal its opt-out law at any time by passing a new local law ^[1]. The repeal is not subject to permissive referendum — only the original opt-out was ^[1][3]. Once repealed, the locality is permanently opted in and cannot opt out again.

Municipalities considering reversal typically:

1. Hold public hearings
2. Pass a repeal of the opt-out local law
3. File the new local law with the New York Secretary of State
4. Notify the Office of Cannabis Management

Licensed retailers can then apply to operate within the jurisdiction subject to local zoning ^[2].

Not legal advice

This article is informational only and is not legal advice. Cannabis law in New York is actively evolving — the OCM continues to issue regulations, courts have ruled on various MRTA provisions, and municipal opt-out status changes. If you are making a business, licensing, real estate, or compliance decision, consult a New York-licensed attorney and verify current statute, regulation, and your specific locality's status with the Office of Cannabis Management and the municipal clerk.

Information last verified: January 2025. Check the OCM site (cannabis.ny.gov) for the most current opt-out registry.

Sources

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