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The case came a few weeks after the state's legal marijuana office told about 150 existing or proposed cannabis shops that regulators had been misreading a state law that requires dispensaries to be a certain distance from schools.

In the roughly three years since the state started licensing , officials have been meeting a requirement that dispensaries be 500 feet (152 meters) away from the nearest school by measuring the distance from the school's door to the door of the business.

The state now says the law actually requires them to measure from the school's property line.

About 60 shops were licensed and opened under the incorrect measurement system, state officials said, plus around another 40 that have licenses but haven't yet opened for business. Then there are almost 50 other businesses that have applied for licenses and are awaiting final approval from the state.

The dispensaries that are open have been told they can continue to do business for now and operate with expired licenses as long as they filed applications for renewal. The state has set up a fund where applicants can get up to $250,000 to help relocate.

The cannabis office said it is urging state lawmakers to craft a permanent fix to allow the businesses to remain in their current locations, but have also noted that it is not guaranteed. The state Legislature isn't set to meet again until next year.

A spokesperson with the state cannabis office declined to comment on the lawsuit, which was filed by a dozen businesses.

The school proximity problem marked the latest blow to the state's legal cannabis program, which has been plagued by that have stalled the market, led to and allowed to flourish.

There are around 450 cannabis dispensaries currently open in New York, according to the state.