Riverhead’s first marijuana shop has OK from state, but site is banned by town code

A NYC-based company that was granted a provisional license to operate a retail marijuana dispensary is looking to set up shop in a vacant former bank branch on Ostrander Avenue in Riverhead. Its owners are looking for the town to change restrictive zoning requirements that would prevent their store from opening.

If the license gets final approval, the dispensary would be located at 1201 Ostrander Avenue, in a long-vacant bank building built by Suffolk County National Bank and closed by People’s United Bank in 2017, after People’s acquired SCNB that year.

The 1.4-acre site is located 210 feet north of Route 58, in the Business Center zoning district. It is situated on the west side of Ostrander Avenue between a gas station and the former McGann-Mercy High School site, which is now owned by Peconic Bay Medical Center. Across the road are an auto dealership and a medical office building.

While the commercial zoning of the site allows a broad range of retail uses, another town code that regulates the location and operation of retail marijuana shops and lounges prevents a retail marijuana dispensary from being sited there. 

Riverhead Town’s cannabis code, adopted in November 2022, allows the use in any town zoning district where retail stores are permitted, but establishes setback restrictions prohibiting marijuana shops and lounges within certain distances from certain other uses. One of those setback restrictions bans marijuana shops and lounges within 1,000 feet of an existing residential use, “measured from the nearest property lines of each of the affected parcels.”

The former bank branch site runs afoul of that restriction. A single-family home is located just under 50 feet away on the east side of Ostrander Avenue. Less than 750 to its north, at the end of Ostrander Avenue on Middle Road, is the Saddle Lakes condominium development. The property lines of dozens of other residential uses are also within the 1,000-foot, property-line-to-property-line, restriction: John Wesley Village (752 feet), Sunken Pond Estates (950.6 feet) and existing single-family homes along Middle Road, Ostrander Avenue south of Route 58 and Ackerly Street, also south of Route 58.

The owners of the company granted the provisional license by the state Cannabis Control Board attended the town’s marijuana advisory committee meeting last night at Town Hall to advocate for the town to ease its restrictions concerning residential uses.

Provisional license holders must gain site-specific approval of the local municipality, including a certificate of occupancy, before the state will grant the final license, said Sean Lustberg and Joe Lustberg, owners of Mottz Only Authentic New York Style, the prospective licensee.

“It’s very difficult to find a location,” Sean Lustberg said last night. 

“We looked for months,” Lustberg told the committee, led by Council Member Ken Rothwell. Lustberg said they looked at property in every town on Long Island that did not opt out of marijuana sales, including Riverhead. 

“We looked at every property in Riverhead,” he said. “There’s really nothing available” that meets all the zoning restrictions and also has no federally insured mortgage, he said. Marijuana sales remain illegal under federal law. People who own properties that have federally insured mortgages can jeopardize their mortgages by leasing to a marijuana business, Lustberg said. One property they identified as eligible is owned by someone who won’t rent or sell to anybody in a cannabis business, he said. 

Lustberg asked the town to remove the zoning restriction that requires a 1,000-foot setback from residential uses. “I don’t see why it needs to be there, the state doesn’t have that. I do think it should definitely be changed — if not gotten rid of, reduced drastically to 250 to 500 feet.”

Riverhead was notified yesterday of the provisional license granted by the state. Supervisor Yvette Aguiar made the announcement at the Town Board meeting yesterday afternoon. 

Coincidentally, the advisory committee meeting had already been scheduled. 

Rothwell told the committee last night he reconvened the group to discuss the town’s zoning restrictions, which he conceded might be unfairly restrictive. 

He said in an interview after the meeting he is concerned that if the town’s rules are too restrictive, the state would dictate where the establishments could be located. 

Unless a municipality opted out as provided in the state law legalizing the use and sale of recreational marijuana — an option that ended in 2021 — it could not ban retail marijuana shops or “on-site consumption lounges” within its borders. Restrictions that are so strict as to effectively ban the establishments are prohibited by state law. 

The Lustbergs would not say last night whether the company would appeal to the State Cannabis Control Board to issue an opinion as to whether Riverhead’s zoning rules are “unreasonably impracticable” under state law. Under the Office of Cannabis Management’s regulations, an unreasonable impractical claim can be brought to the Cannabis Control Board contesting the validity of a local law. After a review is conducted, the board would issue an advisory opinion as to whether the local law violates the state law. Nothing in the regulations or state law gives power to the Office of Cannabis Management to annul the town’s local law.  

“We’re going to try to go through the municipality’s process and then take it from there,” Joe Lustberg said. 

Sean Lustberg said the state gives the applicant a 60-day window to complete the application once granted provisional approval.

Even if Riverhead is inclined to change its code, Lustberg said it seems like it could take some time to happen. The advisory committee came to no conclusions last night. It will be reconvened again as soon as town staff has a new parcel map prepared depicting different options, Rothwell said. That could be as soon as two or three weeks, he said. Then he’d call another committee meeting and if the group agrees on a proposal, it will go to the Town Board, which, if a majority supports it, will have to hold a public hearing. 

An amendment is not feasible prior to the new year, Rothwell said.