Another cannabis dispensary sues town over zoning rules | Long Island Business News

Frustrated by countless hurdles and denials from the Town of Southampton, the owners of a long-planned cannabis dispensary have taken the town to court. 

The lawsuit filed in Suffolk State Supreme Court earlier this month by the dispensary Mottz Green Grocer and its state licensee Sean Lustberg, claims the town and several of its officials have “superseded their authority, implemented and enforced unlawful local laws, and imposed unlawful barriers” in keeping the business from opening. The complaint notes that no other businesses, even liquor stores or places that serve alcohol, are subject to the singularly onerous restrictions that the town has created for cannabis businesses. 

Lustberg and his brother Joe have spent more than two-and-a-half years on their new business, spending the last year trying to get town approval to open a new cannabis dispensary at a long-vacant bank building at 93 East Montauk Highway in Hampton Bays. While the entrepreneurs have a greenlight from the state’s Office of Cannabis Management (OCM) to open, they’ve been denied approval from the town, which claims the location is too close to property owned by the Church of St. Rosalie, which hosts Our Lady of the Hamptons Catholic School. 

While town zoning mandates that a cannabis dispensary needs to be at least 200 feet from a house of worship, any cannabis dispensary needs to be at least 500 feet away from a school. Though the OCM says the door-to-door measurement from a school to a dispensary building is the standard, the town’s chief building inspector measured from each property line, which rendered the planned dispensary location too close by about three dozen feet. 

Besides the measurement discrepancy, the lawsuit chronicles other town actions that have cost the Lustbergs plenty of time and money, including the requirement of a special exception permit, limiting where a dispensary can locate, and additional regulations that run counter to rules established by the state. To further undermine the Lustberg’s venture, the town rezoned their leased Hampton Bays property in July to ‘hamlet commercial,’ where cannabis dispensaries are not allowed. 

The lawsuit, filed by attorney Linda Baldwin, a former OCM general counsel now with Bronxville-based Vasquez Attorneys at Law, which has represented several cannabis dispensary licensees, outlines 11 town-imposed regulations that violate or are pre-empted by the state’s cannabis law. While State Supreme Court Justice Paul Hensley denied the plaintiffs’ motion for an immediate temporary restraining order on town enforcement, a hearing on a preliminary injunction is scheduled for Tuesday, Sept. 23. Hensley is the same judge who in July struck down the Town of Riverhead’s law that cannabis dispensaries have to be at least 1,000 feet from residential uses and can’t be within 2,500 feet of each other. 

As was ruled in the Riverhead case, Baldwin contends that Southampton’s requirements conflict with state law. 

“We believe the town is discriminating against Mottz and keeps changing the rules every time Mottz fulfills the town’s requirements,” Baldwin told LIBN. “This case asks the court to issue a judgment declaring whether the town had the authority to substitute its own rules for those already established by the state.”  

However, Southampton Town Attorney James Burke said that the town had worked closely with the state OCM to make sure its code provisions were in line with the applicable state law.   

“In this matter the town’s chief building inspector found that the site was within the required 500-foot setback from a school,” Burke said. “The provision is contained in both the state law and the town code. The town feels very strongly that the town code provisions are compliant with the state law, and the town is well within its rights to set these reasonable standards for the proper review of these respective cannabis dispensary applications.” 

The Mottz lawsuit was the second cannabis dispensary suit filed against Southampton in eight days. On August 27, a suit filed by Brown Budda New York LLC claims the town has created arbitrary and capricious hoops to jump through to open its dispensary, which conflicts with state law. Though the town’s planning board gave Brown Budda site-plan and conditional approval of its special exception permit on July 24, the lawsuit claims the town’s actions have violated the business owner’s constitutional “due process” and “equal protection” rights. 

Both lawsuits maintain that Southampton has discriminated against cannabis businesses by creating unreasonable and expensive obstacles that other businesses aren’t subject to. Baldwin believes the Mottz action could be a test case used to determine whether municipalities can the override the state by setting up special exceptions only for cannabis businesses and singling them out for special hoops to jump through. 

“This case is a test case for whether the Town of Southampton’s or any municipality’s local laws are permissible…” Baldwin said. “This may be the first decision to really tackle just what the cannabis law says and doesn’t say and what will hold up and what won’t hold up.” 

Meanwhile, the Lustbergs have invested more than $500,000 in their dispensary venture and delays in opening have likely cost millions in lost sales. 

“We are fighting for fairness, not just for our business, but for every local entrepreneur who plays by the rules,” Sean Lustberg told LIBN. “We’re seeking expedited relief because the town’s actions are causing real harm in real time. This isn’t just a legal issue, it’s about accountability.”