New York State cannabis regulators are growing increasingly frustrated with businesses owners they suspect are selling or “gifting” cannabis and cannabis products.
All of it is currently illegal. While lawmakers passed the Marijuana Regulation and Taxation Act (MRTA) last March, and regulators are working to stand up the legal adult use industry, zero adult use cannabis licenses have been awarded. Existing medical cannabis operations, called Registered Organizations (ROs), are tightly regulated and are not among those engaging in this activity.
On Tuesday, the state’s Office of Cannabis Management announced that more than two dozen cease and desist letters were sent to businesses across New York State. These recipients face fines and criminal penalties, and they also risk being permanently iced out of the legal market once it’s live. Further, the landlords leasing to unlicensed cannabis operators are “jeopardizing your ability to house a licensed retail dispensary or on-site consumption lounge in the future,” according to a sample cease and desist letter.
The Office of Cannabis Management is currently working on draft regulations for the adult use industry, which are expected to be released in the spring, followed by a roughly six month comment period, with likely revision and reissuance of the rules.
New York Sen. Diane Savino, a longtime supporter of medical and adult use cannabis, told Cannabis Wire that she asked for the enforcement action.
“That directive, which I asked for, is long overdue,” Savino told Cannabis Wire. “We have all sorts of people who are exploiting what they think is the law here in New York, when it’s clearly not legal, what their activities are. It’s bad enough that we have the illegal market. But now you have people who are setting up dispensaries, obtaining product God only knows from where, and then claiming that it’s completely legal because they’re not selling marijuana, they’re gifting it, or it’s a benefit as a condition of membership in their club.”
Now, Savino told Cannabis Wire, she’s actively working on legislation which will be formally introduced when it returns from drafting.
“I have no problem introducing legislation restating clearly that this activity is not in compliance with the current statute, and that, in fact, if you’re engaging in this behavior, you will never get a license in the State of New York of any type of license to sell, to grow, to cultivate, to process, to deliver,” Savino said.
Savino said she’s also spoken to members of the State Police and the New York City Police Department, because while MRTA decriminalized personal use and possession of up to three ounces of cannabis, unlicensed sales or gifting are explicitly not part of the law.
“We need enforcement from our partners in the State Police and local law enforcement. And they seem to be somewhat confused as to what you can and can’t do, who you can and can’t prosecute,” Savino said. “These, you know, entrepreneurs, if you want to call them that, are in possession of way more than three ounces of marijuana.”
The topic of unlicensed cannabis gifting and sales has repeatedly come up at OCM’s Cannabis Conversations, a series of online events throughout the state during which Tremaine Wright, executive director of the Cannabis Control Board within the OCM, has fielded questions.
On Monday, for example, during the event that covered the Central region of the state, Wright answered a question from an attendee about whether “sticker stores” are allowed, and, if not, how they’re being “handled.” Sticker stores have cropped up, especially upstate, where cannabis consumers can purchase stickers and receive cannabis as a “gift.”
“All of them are absolutely illegal. They are offering you cannabis if you purchase something else, and it doesn’t matter if it’s a sticker or if it is a can of coffee or if it’s a t-shirt, all of those exchanges are illegal,” Wright said on Monday. “These products are not known to be tested. You don’t know that they’re safe. We’re asking you not to participate in those sales.”
Wright also alluded on Monday to Tuesday’s cease and desist letters, noting that OCM was going to put “these operators on notice,” and adding that those operators will put “their possibility of obtaining an awesome license to operate under new adult use regulations at risk every time they perform one of these exchanges.”
The practice of cannabis “gifting” is far from new and has been seen in other states, though it becomes particularly rampant in jurisdictions that have legalized cannabis without a plan for a sales regime, like in Washington, D.C., which has legalized only home cultivation and personal use.
What’s next for these unlicensed operators?
“The OCM has an enforcement unit that conducts investigations. This is an ongoing investigation and we will work with our partners in government to enforce the law,” Freeman Klopott, OCM spokesperson, told Cannabis Wire by email.
