A prominent Harlem business group filed a lawsuit on Wednesday seeking to stop the state from building a recreational cannabis dispensary on the neighborhood’s main street, adding to the challenges faced by New York State in its rollout of the recreational marijuana industry.
The lawsuit may signal trouble for efforts to open stores in some communities that lawmakers intended to benefit the most from legalization, and it underscores the sentiment expressed by some that they have been left out of the planning process.
The suit, filed by the 125th Street Business District Management Association in State Supreme Court in Manhattan, seeks to cancel the state’s lease on a storefront at 248 West 125th Street, across from the Apollo Theatre, in the first case challenging the secretive process regulators use to choose dispensary locations.
“This is a naked, intentional and bold attempt to avoid community opposition,” the lawsuit said.
While the association said it does not oppose having a dispensary on 125th Street or elsewhere in Harlem, the complaint said the current location is “irredeemable” because it would add to the crime, congestion and open drug use already plaguing the area.
In justifying the concern, the suit revealed that the property’s landlord also rents space to an unlicensed dispensary just two blocks away, a shop that was the scene of a recent murder and multiple shootings, and which is under investigation for selling cannabis illegally.
“These policies sound great when you work in a vacuum,” said Barbara Askins, the president and chief executive of the 125th Street business association. “But you can’t take a community with so many challenges and expect them to be able to handle what you’re doing while they already have less resources.”
The lawsuit names the Dormitory Authority, which is the state public construction agency, the Office of Cannabis Management, its executive director, and 246 West LLC among the defendants. According to city property records, 246 West is controlled by the Fata Organization, which owns several buildings on 125th Street.
The agencies did not immediately respond to a request for comment on the lawsuit on Wednesday evening. A representative of the Fata Organization could not be reached for comment.
The Dormitory Authority leased the 125th Street storefront in December as part of a new push to provide retail locations to entrepreneurs selected to open the state’s first 150 licensed dispensaries.
The agency does not appear to have known about the landlord’s ties to the unlicensed dispensary, located at 304 Lenox Avenue. City property records confirm that the building is owned by the same firm as 248 West 125th Street, and the smoke shop was one of 400 businesses singled out by Alvin Bragg, the Manhattan district attorney, in February in letters threatening eviction.
The state’s lease has in effect put regulators responsible for propping up the legal cannabis market in business with one of the landlords that the authorities have blamed for enabling some 1,500 stores to undermine it.
Jeffrey Gordon, a spokesman for the Dormitory Authority, which chooses the locations, declined to say whether officials were previously aware of the connection. Aaron Ghitelman, a spokesman for the Office of Cannabis Management, said officials there had not known. Mr. Gordon said the agency only vets the proposed location, not other tenants of the landlord who owns it.
Industry observers said the revelation was embarrassing at best and a conflict of interest at worst.
“It’s a huge problem,” said Jeffrey Hoffman, a cannabis lawyer who is not part of the suit. “It’s fundamentally opposed to what you’re trying to do here.”
The 125th Street group’s lawsuit suggests the situation might have been avoided if the state had made more of an effort to explain its decision and address local concerns.
Besides the group’s leaders, several other officials, including a local State Assembly member and the district manager of the community board, have said the plans for the site came as a surprise.
Daniel Blumenstein, the plaintiffs’ lawyer, said the business group met with Stacey Lynch, the governor’s chief of staff, in March, but officials still offered no rationale for their decision or information about what was coming.
“We were stonewalled,” he said.
Officials said the site selections followed an exhaustive review conducted by the real estate firm CBRE that included determining whether properties met regulatory requirements and were “least likely to generate community concerns,” among other criteria. Mr. Gordon, the Dormitory Authority spokesman, said his agency had worked closely with the Harlem community to find the best location.
In its lawsuit, the group said there was no evidence that the Harlem site was selected for any reason except that it was available. Its lease was one of just 15 the state had signed by the end of March for legal dispensaries as it struggled to find landlords willing and able to rent them space.
The lawsuit also accused state officials of violating their own rules. Requirements in state law and regulations require dispensaries to be at least 500 feet from schools and community centers. The selected storefront, however, is steps away from a medical college that operates an after-school program for high school students and across the street from an office where middle and high school students go for suspension hearings. The building also houses a drop-in center for homeless youth.
Mr. Ghitelman, of the Office of Cannabis Management, said in a statement before the lawsuit was filed that the distance requirements apply only to buildings that are exclusively used as schools. The regulations also carve out an exception for current licensees to open dispensaries closer to community centers.
Lloyd Williams, the president of the Greater Harlem Chamber of Commerce, said local lawmakers and community groups will not support a plan to open a dispensary in Harlem without the state reducing an “overabundance” of substance abuse services within a two to three block radius that he said were already causing problems on 125th Street.
He said the services, which include a supervised injection site that opened over local objections in 2021, had contributed to an increase in people openly doing drugs on the street, where they can be seen nodding off or shooting up, creating quality-of-life problems for residents, businesses and churches.
“Let’s break them up so that they’re welcome in certain area and not overwhelming,” he said. “If you’re putting a dispensary in that location, without doing anything to mitigate the impact, it’s poor thinking.”
Researchers have not found strong links between legalization and violent crime. But in New York City, smoke shops that have popped up selling cannabis illegally have been robbed hundreds of times, the police said, sometimes resulting in shootings and killings.
Captain Tarik Sheppard, the commanding officer of the 28th Precinct, which covers most of the business district, said that fears of crime accompanying the opening of a dispensary were not without merit. Before the pandemic, there was a more structured drug market with only occasional violence over territory, he said. But the situation has now become more volatile, Capt. Sheppard said, as dealers from outside the neighborhood compete for customers coming to the supervised injection site on 125th Street, and to several nearby methadone clinics and needle exchanges.
Their customers often steal from stores to support their addictions, he said. As of April 17, shoplifting between Fifth Avenue and Morningside Avenue has increased nearly 33 percent, from 92 incidents in 2022 to 122 incidents in 2023, according to recent police crime maps.
”It’s going to attract a crowd that you have to be concerned about,” he said. “The drug dealers who are coming into this area are going to try to undercut the legal dispensaries, and it brings in troublemakers.”