New York Governor Unveils Plan To Address Illicit Pot Shops

New York Governor Kathy Hochul on Wednesday unveiled new legislation to combat the state’s persistent illicit cannabis operators. The bill, which already has the support of dozens of lawmakers in the New York Senate and State Assembly, also provides increased authority for regulators including the Office of Cannabis Management and the Department of Taxation and Finance to enforce regulations and close stores engaged in illegal cannabis sales.

“Over the past several weeks I have been working with the legislature on new legislation to improve New York’s regulatory structure for cannabis products,” Hochul said in a statement from the governor’s office. “The continued existence of illegal dispensaries is unacceptable, and we need additional enforcement tools to protect New Yorkers from dangerous products and support our equity initiatives.”

New York Legalized Recreational Weed In 2021

New York legalized adult-use cannabis in 2021 and the first recreational marijuana dispensary opened its doors in Manhattan late last year. But so far, only four Conditional Adult Use Retail Dispensary (CAURD) retailers have opened statewide. Meanwhile, the number of unlicensed pot shops has skyrocketed, prompting operators in the nascent licensed cannabis industry and others to press state officials for action against illicit operators.

Under the proposed legislation announced by Hochul on Wednesday, New York’s tax and cannabis laws would be amended to enable the Office of Cannabis Management (OCM), the Department of Taxation and Finance (DTF) and local law enforcement agencies to enforce restrictions on unlicensed storefront dispensaries. The legislation does not impose new penalties for cannabis possession for personal use by an individual and does not allow local law enforcement officers to perform marijuana enforcement actions against individuals.

“This legislation, for the first time, would allow OCM and DTF to crack down on unlicensed activity, protect New Yorkers, and ensure the success of new cannabis businesses in New York,” the governor’s office wrote. “The legislation would restructure current illicit cannabis penalties to give DTF peace officers enforcement authority, create a manageable, credible, fair enforcement system, and would impose new penalties for retailers that evade State cannabis taxes.”

The bill clarifies and expands the OCM’s authority to seize illicit cannabis products, establishes summary procedures for the OCM and other governmental entities to shut down unlicensed businesses, and creates a framework for more effective cooperative efforts among agencies. 

Violations of the law could lead to fines of $200,000 for illicit cannabis plants or products. The legislation also allows the OCM to fine businesses up to $10,000 per day for engaging in cannabis sales without a license from the state.

Elliot Choi, chief knowledge officer at the cannabis and psychedelics law firm Vicente LLP, hailed the use of financial penalties instead of jail time to help reign in New York’s illicit cannabis market. 

“Governor Hochul’s proposed legislation is very much welcomed as prior efforts to combat the illicit dispensaries haven’t appeared to have much of an impact,” Choi wrote in an email to High Times. “We support the use of fines as opposed to incarceration to avoid recriminalization and a return of anything that resembles the prior failed war on drugs.” 

In addition to fines for unlicensed cannabis operators, Choi said that penalizing property owners who rent to unlicensed businesses would also be an appropriate tool for the state’s cannabis regulators and called for an increase in funding for state agencies tasked with controlling underground operators.

“Landlords should not have any incentives to rent to illegal operators and should be financially punished for doing so,” said Choi. “Finally, both the OCM and the Department of Taxation and Finance need additional resources to enforce as the OCM already has enough on their plate getting the regulations finalized and corresponding licenses issued in a timely fashion.”