diff --git a/iotedgedev/deploymentmanifest.py b/iotedgedev/deploymentmanifest.py
index ea6030e..e718612 100644
--- a/iotedgedev/deploymentmanifest.py
+++ b/iotedgedev/deploymentmanifest.py
@@ -157,7 +157,7 @@ class DeploymentManifest:
     def validate_deployment_manifest(self):
         validation_success = True
         try:
-            if self.is_layered_deployment_schema():
+            if not self.is_layered_deployment_schema():
                 validation_success = self._validate_deployment_manifest_schema()
             validation_success &= self._validate_create_options()
         except Exception as err:
diff --git a/tests/test_iotedgedev_layereddeployments.py b/tests/test_iotedgedev_layereddeployments.py
index feb630c..e19d715 100644
--- a/tests/test_iotedgedev_layereddeployments.py
+++ b/tests/test_iotedgedev_layereddeployments.py
@@ -1,3 +1,5 @@
+from iotedgedev.envvars import EnvVars
+from iotedgedev.output import Output
 import os
 import pytest
 from .utility import (
@@ -5,14 +7,19 @@ from .utility import (
     runner_invoke,
 )
 
-pytestmark = pytest.mark.unit
+pytestmark = pytest.mark.e2e
 
 tests_dir = os.path.join(os.getcwd(), "tests")
-test_assets_dir = os.path.join(tests_dir, "assets")
-test_file_1 = os.path.join(test_assets_dir, "layered_deployment.template.json")
 test_solution_shared_lib_dir = os.path.join(tests_dir, "assets", "test_solution_shared_lib")
 
 
+@pytest.fixture(scope="module", autouse=True)
+def setup_dotenv():
+    output = Output()
+    envvars = EnvVars(output)
+    envvars.set_envvar("MODULES_PATH", "../test_solution_shared_lib/modules")
+
+
 @pytest.mark.parametrize(
     "test_file_name",
     [