A cannabis licensee has sued the Town of Southampton over a recent rezoning, arguing the move prevented its dispensary from opening in a former bank building in Hampton Bays, court filings show.

The town board in July rezoned a stretch of East Montauk Highway, where a developer sought to add a new pot shop. Cannabis sales were allowed in that area until the board approved the rezoning, which bans cannabis sales on that stretch of the highway.

Mottz Only Authentic New York Style and its majority owner, Sean Lustberg, said the town “targeted” the rezoning to block the opening of their cannabis dispensary. Lawyers for the licensee said that for months, town officials had “stalled” approvals for the dispensary before approving the zone change.

The lawsuit seeks to overturn the rezoning as well as monetary damages, citing the potential for significant financial losses.

Southampton Town adopted zoning laws in 2023, limiting the siting of non-medical cannabis dispensaries to two of its eight commercial business districts. 

The town, according to the lawsuit, relied on an outdated plan and environmental impact study to justify the rezoning. 

Southampton Town Attorney James Burke said in an e-mailed statement the lawsuit was “not unexpected.” He noted Mottz had filed a separate lawsuit in September challenging the town’s cannabis zoning law. 

“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,” Burke said.

The lawsuit seeks financial damages and projects $18 million annually in losses — including lost revenue, rent payments and other expenses.

Southampton Town has faced a series of legal challenges to its zoning rules from cannabis companies. Last month, the New York State Office of Cannabis Management ruled that Southampton’s cannabis zoning, as well as Riverhead’s, were “forbidden” under state law.  

The agency had issued advisory opinions calling the towns’ limits “unreasonably impractical.”

The advisory opinion noted that the town had prohibited cannabis shops from the two business districts, blocking them “from areas where other businesses may lawfully operate …” The opinion noted that liquor stores are allowed to operate in four town districts. 

Burke told Newsday in October the two zones where cannabis sales are allowed account for “a pretty significant portion of town.”

The town boards of Southampton and Riverhead Town have authorized a joint lawsuit challenging the OCM’s ruling; though that lawsuit has yet to be filed as of Tuesday.

Southampton Supervisor Maria Moore in a text to Newsday last month said the state’s ruling was “overreaching.” 

Despite the difficulties pot shops have faced getting operational in Southampton, some have opened without town permission. Charlie Fox opened without town approvals in September, before a court order required it to cease operating, Newsday previously reported. The dispensary’s owner is currently seeking town approvals to open.

A separate case is unfolding with Brown Budda, a dispensary which opened its doors last week. Burke has told Newsday the business does not have “proper reviews and inspections.” Last week, the Southampton Town Board authorized Burke to seek an injunction to prevent Brown Budda from operating. 

Brown Budda had sued the town in August in federal court over the town’s zoning rules. In September, the town allowed Brown Budda to open, along with several requirements including construction of a sidewalk.