Governor Kathy Hochul has announced the results of initial enforcement actions against unlicensed cannabis businesses. The efforts in these first two weeks have been led by New York State’s Office of Cannabis Management and Department of Taxation and Finance, which have been authorized under a new law signed by the Governor in May as part of the State’s Fiscal Year 2024 Budget.
“Under new powers that I fought for in this year’s State budget, we can now conduct enforcement against businesses illegally selling cannabis, and I’m proud to report that in just the first three weeks of our efforts, we’ve seized nearly $11 million worth of illicit products off the streets,” Governor Hochul said. “These unlicensed businesses violate our laws, put public health at risk, and undermine the legal cannabis market, and with the powerful new tools in our toolbelt we’re sending a clear and strong message: if you sell illegal cannabis in New York, you will be caught and you will be stopped.”
The New York State Office of Cannabis Management (OCM) and the New York State Department of Taxation and Finance (DTF) have jointly conducted inspections at 33 storefront businesses in New York City, Ithaca, and Binghamton not licensed to sell cannabis. The two agencies have issued Notices of Violation to 31 of these businesses, from which they have seized and catalogued a minimum of 1000 pounds of illicit cannabis with an estimated value of nearly $11 million, and with more still to be tabulated. Enforcement will be continuing weekly throughout the state, with OCM actively recruiting additional officers with the goal of ending the illicit sale of cannabis.
The new enforcement legislation adopted as part of the Budget has authorized OCM to assess civil penalties against unlicensed cannabis businesses, with fines starting at $10,000 per day, and rising up to $20,000 per day for the most egregious conduct. The new law has also authorized the agency to seek a State court order to ultimately padlock businesses found to be in repeated violation of the law, among other penalties. In addition, the law makes it a crime to sell cannabis and cannabis products without a license
In addition to the powers granted to OCM, the new enforcement law also empowers DTF to conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid and to levy civil penalties in cases where they have not. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxesor knowingly possess for sale any cannabis on which tax was required to be paid but was not.
By taking decisive action against unlicensed cannabis businesses, New York State is making a significant stride towardcracking down onunlawful cannabis operations that jeopardize public safety, consumer well-being, and the integrity of New York State’s legal cannabis market. To aid in these continuing actions, the FY 2024 Budget also provides $5M for an additional 37 OCM staff to carry out enforcement.
Governor Hochul also appointed Hope Knight, President, CEO and Commissioner of Empire State Development, to the Cannabis Control Board (CCB). Commissioner Knight will be seated immediately and will serve at next month’s CCB meeting.
New York State Office of Cannabis Management Executive Director Chris Alexander said, “Today, Governor Hochul put out a sharp warning to every business selling cannabis without a license: New York State is coming to shut you down. Thanks to the Governor’s efforts, our enforcement teams are out every day putting an end to the proliferation of unlicensed cannabis sales across New York State. Supporting local entrepreneurs launching legal cannabis businesses with safe and tested licensed products is paramount. OCM is committed to protecting public health and ensuring consumer safety.”
New York State Department of Taxation and Finance Acting Commissioner Amanda Hiller said, “Working with OCM and our law enforcement partners, we’re beginning the process of enforcing regulations regarding the sale of cannabis across New York State. This will be a carefully planned and sustained effort with the ultimate goal of ensuring a fair and regulated market.”
Empire State Development President, CEO & Commissioner Hope Knight said, “Governor Hochul’s vision for a state-led regulatory framework and marketplace for cannabis sets the national standard, and it’s an honor further serve her Administration as a member of the Cannabis Control Board. I look forward to working with the other members to ensure the policies and programs of the Office of Cannabis Management serve the interests of all New Yorkers.”
New York State Assembly Majority Leader Crystal People-Stokes said, “I am pleased to see OCM (NYS Office of Cannabis Management), DTF (NYS Department of Taxation & Finance) and local law enforcement agencies finally able to address and shut down unlicensed and illegal dispensaries. These illicit shops endanger the public’s health, safety and well-being with untested, unregulated products but also confuse the public as they try to perpetrate their businesses and products as licensed and sanctioned even though they are not. These closures are necessary, and combined with continuing to open CAURD dispensaries, will allow New York’s legal cannabis market to reach its full potential.”
State Senator Liz Krueger said, “I am very pleased the Office of Cannabis Management and Department of Taxation and Finance finally have tools needed to shut down unlicensed cannabis operators and protect the growing, equity-focused licensed market. My main focus continues to be ensuring that New York develops a sustainable adult-use economy that supports small businesses and goes some of the way toward repairing the damage caused by the drug war.”
State Senator Nathalia Fernandez said, “The boom of illegal smoke shops poses a significant threat to the carefully established legal marijuana industry in NY. These unlicensed and unregulated establishments not only disregard the rules and standards upheld by licensed dispensaries but also lack accountability for their actions, especially in selling marijuana to our underage kids. Furthermore, the use of potentially dangerous additives in their products jeopardizes consumer safety and undermines the efforts made to ensure quality and compliance within the legal market. Therefore, supporting the crackdown by the Mayor and Governor on these illicit operations is crucial to safeguarding public health, maintaining industry integrity, and upholding the standards set by legitimate businesses.”
Brooklyn District Attorney Eric Gonzalez said, “Unlicensed cannabis sales place legitimate businesses at a disadvantage, cheat New York taxpayers of essential tax revenues, and potentially imperil public health. I commend Governor Hochul for allocating these important civil enforcement resources to stop these unauthorized businesses, to help level the playing field, and to give law-abiding cannabis licensees a fair chance to thrive in the legal cannabis industry.”
New York City District 13 Council Member Marjorie Velazquez said, “This is a critical time for the cannabis industry, and I would like to thank Governor Hochul for her leadership in addressing the bad actors who are putting our communities at risk. Due to her efforts, we will see multi-team enforcement that will curb the proliferation of unlicensed cannabis retailers across the state. There are countless entrepreneurs eager to do business the right way but impacted by the negative actions of others,” said Council Member Marjorie Velázquez, Chair of the Committee on Consumer and Worker Protection. “I look forward to continuing to work with Governor Hochul, New York State’s Office of Cannabis Management, and the Department of Taxation to ensure consumers, businesses, and our communities can access the needed resources to grow the cannabis industry in New York State the right way.”
In addition to the Notices of Violation, the 31 businesses found to be illegally selling cannabis also had Orders to Cease Unlicensed Activity affixed to the outside of the doors. Those businesses must now appear at an administrative hearing, where the final fines and penalties they will face will be determined. An additional fine of $5,000 can be levied for removal of the Order, and the inspected businesses may also be subject to additional violations and penalties under the Tax Law.
Following these initial inspections, OCM and the DTF will be following up on locations inspected to ensure unlicensed activity has ceased. If continued unlicensed activity is found to persist, OCM can petition the State Supreme Court to order the retail space padlocked shut until the location complies with the cannabis law and its related regulations.
Additional information on fines:
If an unlicensed location is found to continue selling cannabis products after OCM issues a Notice of Violation/Order to Cease, an additional per-day penalty of up to $20,000 may be assessed by an ALJ. Further, should the unlicensed business remove the OCM Notice of Violation or Warning affixed to the business storefront, the business is subject to a fine of up to $5,000.
Additional information regarding previous and ongoing operations:
OCM and DTF began their first joint inspections authorized by the new enforcement law during the week of June 5, 2023, in New York City, where inspections will remain active and ongoing.
The following shops were inspected by OCM and DTF officers and have been issued notices of violation:
- Varieties on Broadway – 736 Broadway, New York, NY
- Roll 2 Nation – 738 Broadway, New York, NY
- Baby Jeeter – 793 Broadway, New York, NY
- Maze – 16 St. Marks Place, New York, NY
- LaGuardia Smoke – 510 LaGuardia Place, New York, NY
- Nomad – 59 West 30th Street, New York, NY
- Play Lane – 117B W 23rd Street, New York, NY
- Cannabis Culture – 403 8th Avenue, New York, NY
- Smoke Factory – 287 7th Avenue, New York, NY
- Go Green Dispensary – 603 6th Avenue, New York, NY
- Daydream – 1181 Broadway, New York, NY
- Giggles – 59 1st Avenue, New York, NY
- Empire Smoke Shop – 57 1st Avenue, New York, NY
- NYC Smokes – 104 MacDougal Street, New York, NY
- Caviar – 110 MacDougal Street, New York, NY
- Sweet and Sour – 73 2nd Avenue, New York, NY
- Smart Smokes – 143 1st Avenue, New York, NY
- Old G Convenience Corp – 18 West 14th Street, New York, NY
- Premier Top, Inc – 54 14th Street, New York, NY
- Black Leaf – 103 East State Street, Ithaca, NY
- Zaza Convenience – 101 East State Street, Ithaca, NY
- The Rezz – 312 Fourth Street, Ithaca, NY
- Puff N Pass Smoke Shop – 222 Elmira Road #10, Ithaca, NY
- Green Magic – 114 Henry Street, Binghamton, NY
- Take Off – 2-63 Chenango Street, Binghamton, NY
- BMillz 122 Washington Ave, Endicott NY
- Runtz 14 1st Ave, NY NY
- BMillz 1110 Conklin Rd, Conklin NY
- Royal Vapes, 113 Washington Ave, Endicott NY
- Sogie Mart 24 Ave A, NY NY
- Recreational Plus Dispensary 180 1st Ave, NY NY
