New York Details Latest Efforts To Crack Down on Unlicensed Weed Businesses

New York’s state cannabis regulatory agency this week detailed its latest action to crack down on unlicensed cannabis shops. The New York Office of Cannabis Management (OCM) released a report on its efforts, noting it was the second in a monthly series of enforcement action updates against unlicensed cannabis shops across the State.

The agency reported that during November, investigators from OCM and the New York Department of Taxation and Finance (DTF) inspected 71 shops suspected of selling cannabis without a license, including re-inspections of 13 of the retailers. The inspections resulted in the seizure of 812 pounds of cannabis flower, 701 pounds of weed edibles and 61 pounds of concentrates. The OCM estimated the value of the seized weed products to be $7,284,986.

Last month’s enforcement actions brought to 350 the OCM’s total number of inspections of suspected unlicensed weed shops since beginning the effort in October. The agency, which was created after New York lawmakers legalized cannabis in the state in 2021, pledged to continue inspections of illicit cannabis retailers in conjunction with DTF investigators every week.

OCM Reports Court Victories

The OCM also reported on court victories in its effort to reign in New York’s unlicensed cannabis market. On November 21, OCM, in collaboration with the Office of the Attorney General (OAG), won its first petition for emergency relief under a new section of the state’s cannabis law that went into effect earlier this year. In the case, the court issued a permanent injunction and one-year permanent closing order against unlicensed operator David Tulley of “I’m Stuck” in Wayne County. The Court agreed with OCM and the OAG that Tulley had engaged in the unlicensed sale of cannabis and rejected Tulley’s argument that the “cannabis consulting business model” did not require a state-issued license.

“This victory established an important precedent allowing the State to seek longer term closures for businesses found to be illegally selling cannabis,” the OCM noted in a December 4 statement from the agency.

Additionally, on November 9 OCM and OAG secured a temporary restraining order and temporary order to close and padlock a shop against the unlicensed operator George West of Jaydega 7.0 in Canandaigua, New York. A hearing on the request for a permanent injunction and closure of the retailer is scheduled for next month in Ontario County Supreme Court. 

Fines As High As $20,000 Per Day

Fines for the illegal sale of cannabis start at $10,000 per day and can be increased to $20,000 for the most “egregious conduct,” the OCM noted. An additional fine of $5,000 can be levied for the removal of a closure order, and the inspected businesses may also be subject to additional violations and penalties under the state’s tax laws. Enforcement legislation passed in May 2023 also authorizes OCM to seek a state court order to padlock businesses found to be in repeated violation of the law. The new law also makes it a crime to sell cannabis and cannabis products without a license.

“As we look ahead to this next chapter in New York’s cannabis market, we continue to prioritize safety across the state by working diligently to shut down illegal operators,” OCM executive director Chris Alexander said in a statement on Monday. “The number one remedy for the problem of these illicit shops is getting more legal businesses open.”

“New Yorkers want to know where their products are coming from, and they know they can rely on safe, trusted, and locally grown cannabis when they walk into one of our legal dispensaries,” Alexander added. “We will continue to seize illegal products, and we know that the collaborative work continues across all levels of government to address this public health crisis.”

Michelle Bodian, a partner in the New York office of the Vicente LLP and a member of the cannabis law firm’s licensing and regulatory compliance efforts in the state, said that much more action from regulators will be required before the illicit market can be contained.

“I appreciate that OCM is making an effort to be more transparent with the status of enforcement efforts; however, based upon these stats it seems like NY has a long road ahead,” Bodian wrote in an email to High Times. “I am cautiously optimistic the education and collaboration with municipalities will result in a rapid uptick in enforcement.”