TINK CO INC GM LLC v. TOWN OF RIVERHEAD 1086 LLC LLC (2025)

Upon the following papers read on petitioners’ amended complaint and verified petition pursuant to CPLR Article 78: NYSCEF documents 1 thru 132; it is hereby

ORDERED that the Riverhead Town Code § 301-283.20 (A) (4)’s 2,500-foot buffer between dispensaries is legally invalid, as preempted by New York State Law 9 NYCRR § 119.4 (a) which set the distance at 1,000 feet between locations; and it is

ORDERED that Riverhead Town Code §§ 301-283.20 (A) (4) and (5) are legally invalid and void in violation of Town Law § 262; and it is

ORDERED Moutafis Motors Ltd. does not have priority over petitioners as respondent as the New York State Office of Cannabis Management has not approved respondent for a dispensary at its site.

Petitioners bring a hybrid Article 78 and declaratory judgment action seeking to set aside a denial of a variance application by the respondent Zoning Board of Appeals and allow a former bank pad at 1201 Ostrander Avenue in Riverhead to be used as a retail cannabis dispensary. Initially, as discussed below, no variance was required here as the State of New York under Cannabis Law § 1194.4 (a) and New York Town Law § 262 preempt Riverhead Town Code § 301-283.20 (A) (4) and (A) (5). Significantly, petitioners in March of 2024 received proximity protection from the New York State Office of Cannabis Management over Moutafis Motors Ltd. who are within 300 feet of petitioners’ location, but lack approval of the New York State Office of Cannabis Management.

By way of background, in November of 2022 the Town of Riverhead revised its zoning to allow for retail cannabis in the Town. Thereafter, the 2022 zoning was found to be too restrictive as there were only five properties that might qualify for a dispensary site. In 2024 the zoning code was revised with the adoption of Town Code § 301-283.20 (A) (4) and Town Code § 301-283.20 (A) (5), which apply to all five commercial zoning corridors in the Town. (A) (4) of the Code set a 2,500-foot distance requirement between retail cannabis dispensary locations. While New York's constitutional home rule provision (NY Const., art. IX, § 2 [c]) “confers broad police powers upon local governments relating to the welfare of its citizens” (Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91, 96, 524 NYS2d 8 [1987]), it is well established that a Town cannot adopt laws that are inconsistent with the Constitution or with any general law of the State (Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500, 577 NYS2d 215 [1991]; NY Const. art. IX, § 2[c]). The power of local governments to enact laws is subject to the fundamental limitation of the preemption doctrine. State preemption occurs in one of two ways-first when a local government adopts a law that directly conflicts with a State statute and second, when a local government legislates in a field for which the State legislature has assumed full responsibility (DJL Rest. Corp. v City of New York, 96 NY2d 91, 725 NYS2d 622 [2001]).

Here, petitioners complied with Cannabis Law § 76 after securing a lease to the subject property by providing municipal notice to the Town of Riverhead of an intent to pursue a dispensary at the subject property prior to submitting the application for a retail cannabis dispensary license. Thereafter, the State, through the New York State Office of Cannabis Management, conferred proximity protection on 1201 Ostrander Avenue in March of 2024 and established a 1,000-foot radial boundary protecting the site. As the State of New York has directly addressed the issue, the Town of Riverhead's attempt to address the distance between cannabis dispensaries at 2,500 feet under Town Code § 301-283.20 (A) (4) is preempted by State Law 9 NYCRR § 119.4 (a) which sets the required distance at 1,000 feet (Sunrise Check Cashing and Payroll services, Inc., v Town of Hempstead, 91 AD3d 126, 933 NYS2d 388 [2d Dept 2011], aff'd sub nom. Sunrise Check Cashing v Town of Hempstead, 20 NY3d 481, 964 NYS2d 64 [2013]).

Moreover, on March 31, 2021, the State of New York signed into law The Marijuana Regulation and Taxation Act and declared in its Preamble “it is in the best interest of the state to regulate the legal cannabis industry” expressing a specific intent of the State of New York to regulate this industry. Rules and regulations were drafted under the Office of Cannabis Management and expressly provide that local governments are “preempted from adopting any law, rule, ordinance, regulation, or prohibition pertaining to the operation or licensure of ..adult-use cannabis licenses.” Accordingly, it is the State of New York which regulates this industry, not the Town of Riverhead.

As to Moutafis Motors, Ltd., because the State of New York, through the Office of Cannabis Management, has not granted proximity protect to it and it is within 1,000 feet of petitioners, it may not pursue a dispensary at its current location, within 300 feet of petitioners.

Riverhead Town Code § 301-283.20 (A) (5) is also invalid as it is in direct conflict with Town Law § 262, which requires that zoning measures and ordinances be applied uniformly within the same zoning district. Owners of property in the same district should be treated alike and without discrimination (Tuxedo Land Trust, Inc. v Town of Tuxedo, 34 Misc 3d 1235 (A), 950 NYS2d 611 [Sup 2012] aff'd 112 AD3d 726, 977 NYS2d 272 [2d Dept 2013]). Town Law § 262 requires that “zoning regulations shall be uniform for each class or kind of buildings throughout each zoning district.” Here, the Town of Riverhead established five commercial corridors where commercial property may pursue licensure for a cannabis dispensary as of right even when there is a zero-foot distance between it and a residential lot line. That Code allowance must be applied to all properties within the commercial corridor equally. As the subject property lacks direct frontage on Old Country Road the Town is requiring a variance. This both lacks uniformity and is discriminatory. As such, Riverhead Town Code § 301-283.20 (A) (5) is invalid as a matter of law. All property within the zoning district must be treated uniformly. The requirement that the subject property, which abuts the cannabis corridor, is not within the corridor because it lacks frontage on Old Country Road is invalid. Significantly, the New York State Office of Cannabis Management authorized site protection to the subject property expressly indicating that retail cannabis sales should be permitted at the subject property.

This Court holds that no variance is required by petitioners and that they may proceed with the process of obtaining a building permit and a certificate of occupancy. In any event, even if a variance was required the denial of that variance was arbitrary and capricious.

Petitioners also move pursuant to CPLR Article 78, to annul the Zoning Board of Appeals determination, dated February 13, 2025. Local zoning boards have broad discretion in considering applications for variances, and judicial review is limited to determining whether the action taken by the board was illegal, arbitrary or an abuse of discretion (see Matter of Ifrah v Ultschig, 98 NY2d 304, 746 NYS2d 667 [2005]; Matter of Fuhst v Foley, 45 NY2d 441, 410 NYS2d 56 [1978]; Matter of Miller v Town of Brookhaven Zoning Board of Appeals, 74 AD3d 1343, 904 NYS2d 199 [2d Dept 2010]). Thus, the determination of a zoning board will be upheld if it is rational and not arbitrary and capricious (see Matter of Sasso v Osgood, 86 NY2d 374, 633 NYS2d 259 [1995]; Matter of JSB Enterprises v Wright, 8l AD3d 955, 917 NYS2d 302 [2d Dept]; Matter of Caspian v Zoning Board of Appeals, 68 AD3d 62, 67, 886 N YS2d 442 [2d Dept 2009]). A determination is rational “if it has some objective factual basis, as opposed to resting entirely on subjective considerations such as general community opposition” (Matter of Caspian v Zoning Board of Appeals, supra quoting Matter of Halperin v City of New Rochelle, 24 AD3d768, 772, 809 NYS2d 98 [2d Dept 2005]; see Matter of JSB Enterprises v Wright, supra). Where a rational basis for the determination exists, “a court may not substitute its own judgment for that of the board, even if such a contrary determination is itself supported by the record” (Matter of Retail Prop. Trust v Board of Zoning Appeals of Town of Hempstead, 98 NY2d 190, 196, 746 NYS2d 662 [2002]; see Matter of Gebbie v Mammina, 13 NY3d 728, 885 NYS2d 450 [2009]; Matter of Roberts v Wright, 70 AD3d 1041, 896 NYS2d 124 [2010]). Appeals of Town of Brookhaven, 77 AD3d 949, 910 NYS2d 123 [2d Dept 2010]; Matter of Monroe Beach Inc. v Zoning Bd of Appeals of City of Long Beach, 71 AD3d 1150, 898 NYS2d 194 [2d Dept 2010]).

Pursuant to Town Law § 267-b:

No such use variance shall be granted by a board of appeals without a showing by the applicant that applicable zoning regulations and restrictions have caused unnecessary hardship. In order to prove such unnecessary hardship the applicant shall demonstrate to the board of appeals that for each and every permitted use under the zoning regulations for the particular district where the property is located, (1) the applicant cannot realize a reasonable return, provided that lack of return is substantial as demonstrated by competent financial evidence; (2) that the alleged hardship relating to the property in question is unique, and does not apply to a substantial portion of the district or neighborhood; (3) that the requested use variance, if granted, will not alter the essential character of the neighborhood; and (4) that the alleged hardship has not been self-created.

In its February 13, 2025 determination, the Riverhead Zoning Board of Appeals considered these four (4) factors. As to whether the subject property was able to generate a reasonable rate of return, at the initial hearing the owner of the subject property did not testify. However, after the close of the hearing, the board considered the affidavit of the property owner that the subject property had been marketed for permitted uses, i.e. restaurant, medical office, etc. but has remained vacant for eight (8) years. Given this unrefuted testimony that the board did consider after the close of the hearing, petitioners have established that the subject property was unable to present a reasonable rate of return without a variance. The competent financial evidence here is that the property returned a zero or negative rate of return.

As to whether the hardship was unique to the subject property, the board determined that it was not a unique hardship as there are other parcels within the Business Center Zoning Use District that are not within the Corridor Three and are also within 1,000 feet of an existing residential use. The evidence does establish that the subject property is unique because it is configured as a bank pad, has New York State Office of Cannabis Management approval, and is able to handle cash transactions.

The Zoning Board of Appeals determined that the use variance will alter the essential character of the neighborhood, finding that the subject property is not within the commercial corridor and has no access from its site to Route 58. The position of the Board on this issue is frivolous and discriminatory as cannabis can be sold on either side of the subject property as-of-right. Twenty-five other stores are in the same proximity to the same residential lots which are allowed to sell cannabis, accordingly, there would be no change in the essential character of the neighborhood.

The Zoning Board also found that the hardship here was self-created as “zoning was already in place prior to the lease agreement with the property owner.” As discussed above, that zoning was in place in November 2022. However, the Town recognized that its zoning was too restrictive. In November 2023 and November 2024, the tenant entered into the lease agreement for the subject property and in November of 2024 the town amended its zoning. The Board took the position that petitioners were aware in October of 2023 that the subject property “was unlikely to be included in any new zoning that could be adopted.” Therefore, the hardship here was self-created. The letter in October 2023 was not part of the Board's record and, therefore, was improperly considered. More importantly, for the tenant to qualify for a cannabis license, securing land was statutorily required and the subject property was being considered for cannabis sites during rezoning discussions. Given that the Town's October 4, 2023 letter to the New York State Office of Cannabis Management was not sent to petitioners until a year later in the fall of 2024, the conclusion that petitioners’ hardship was “self-imposed” is not rational and violates due process.

Paul M. Hensley, J.