Judge Rules Mottz Green Grocer Can Open; Southampton Wins Temporary Reprieve

A state supreme court decision cleared the way for Mottz Green Grocer to open a cannabis dispensary in the former North Fork Bank at 93 East Montauk Highway in Hampton Bays, but a state appellate court on Jan. 13 put that order on hold while the town and the operator continue to litigate the zoning dispute.

Supreme Court Justice Paul Hensley ruled on Dec. 23 that Southampton Town had wrongly blocked the proposed shop because of the building inspector’s claim that the site sat closer than the town’s 500-foot minimum from a preschool behind St. Rosalie’s RC Church. Hensley found that the State Office of Cannabis Management had already inspected and approved the site, and noted that “New York State Office of Cannabis Management officials had deemed it far enough away and approved the site as suitable for a dispensary under the state’s regulations.” The Dec. 23 order directed the town to allow the owners to open “almost immediately.”

The ruling did not end the dispute. A state appellate court judge granted Southampton Town a temporary stay on Jan. 13, pausing immediate operation while the court reviews legal and zoning questions. The stay requires the town to show why the business should not be allowed to open during the appeals process.

Owners Joe and Sean Lustberg sued the town in September, challenging the July rezoning that limited cannabis shops on the Montauk Highway corridor and effectively blocked the bank building conversion. The complaint alleges town officials have “superseded their authority, implemented and enforced unlawful local laws, and imposed unlawful barriers” to prevent the business from opening. Mottz projects $18 million annually in losses in its complaint, citing lost revenue, rent payments and other expenses, and the Lustberg brothers and their investors “have already spent hundreds of thousands of dollars on the project” and are still paying rent on the site.

Southampton Town Attorney James Burke defended the board’s actions, saying, “We are confident that the court will recognize that the town board in voting for the zoning amendments acted well within their legislative authority and such action was based on an extensive planning study concerning the Hampton Bays Montauk Highway corridor.” The town also has authorized legal action aimed at other dispensaries that have sought to open, including seeking an injunction against Brown Budda and enforcement steps that led to a temporary restraining order keeping Charlie Fox closed after it opened without town approval.

The dispute has broader implications for Hampton Bays and Southampton Town. Local licensing and siting decisions intersect with state regulation and advisory guidance that the New York State Cannabis Control Board described as “unreasonably impractical” for municipal regulation in some cases. The local landscape includes three state-licensed dispensaries in Southampton Town, 10 dispensaries on Shinnecock Nation land, two more retailers approved by the town and about a half-dozen pending applications, including Mottz.

For residents, the case matters for commercial activity along Montauk Highway, enforcement consistency, and how local planning studies will shape which businesses can operate downtown. The appellate review is the next formal step; the outcome will determine whether Mottz Green Grocer can open while the underlying legal and zoning challenges play out, and could set precedent for other pending or contested dispensary applications.