Sure they can. There is no requirement that a company provide vacation time as a benefit. It is a major expense offered to be competitive and also for the sanity of their employees.
However, as an employee's vacation time accumulates, it becomes a huge potential liability which is typically managed by several rules, such as limiting the total accumulation one person can have.
They are bound only by the agreement they have with you as an employee. This is what the "company policy" is. Read it, learn it, love it.