The first NY cannabis licenses have been approved — but these are the 3 obstacles dispensaries still face

Housing Works opened the first dispensary in New York state on December 29.A real-estate expert said license holders now face challenges with finding the right properties.Business owners face strict regulations and uneducated landlords in their searches for storefronts.

The first legal dispensary in New York state opened its doors in December, but a commercial-real-estate expert said cannabis-business owners have some hefty obstacles to overcome before they can follow suit.

In March 2021, the state of New York legalized recreational marijuana for adults, but it took nearly two years for the Office of Cannabis Management to approve the first 36 business licenses for dispensaries. The next hurdle is finding the right real estate for stores, Gregory Tannor, a real-estate executive with Lee &Associates NYC, told Insider.

According to Tannor, opening a brick-and-mortar dispensary isn't quite the same process as a opening a brick-and-mortar coffee shop or clothing store. There are "buffer zones" that cannabis-business owners must take into account while shopping for real estate. 

"Buffer zones are crucial for approval for the OCM," Tannor told Insider."These locations have to be outside of a certain vicinity of schools, places of worship, parks, and other dispensaries."

To comply with New York's buffer zones, a cannabis business cannot be within 500 feet of school or within 200 feet of a house of worship, according to a report from Bloomberg. The businesses must also be 1,000 feet away from other dispensaries, Tannor added.

Hesitant landlords are another hurdle license holders will have to overcome to open storefronts. Marijuana's illegal status at the federal level coupled with the poor reputation of illicit New York smoke shops means building owners often have reservations about leasing to legal dispensaries.

"There are landlords out there who just aren't interested, but we try to educate them on what a dispensary actually is, feels, smells, tastes like, and the type of demographic it attracts," Tannor said.

However, other landlords are aware of the multibillion-dollar cannabis industry and are hoping to cash in on the opportunity by raising the rent for cannabis businesses. "When you find the compliant real estate, the next step is dealing with some of these landlords who start to put a cannabis tax on their property," Tannor said, adding that that's where he and his team come in "with a Rolodex of compliant real estate" to help.

Despite the uphill battle to open legal dispensaries in New York, Tannor told Insider to expect more places to purchase weed to open in the next few weeks. He predicted the shops will open on a "rolling basis" during 2023.