Pressure is building for New York’s cannabis regulators and officials to address ballooning unregulated cannabis sales across the state.
Lawmakers passed the Marihuana Regulation & Taxation Act last year. It decriminalized cannabis possession and set the state on a path toward legal adult use cannabis sales in the coming months.
But meanwhile, ahead of the launch of the legal industry, illegal sales have become increasingly commonplace, from converted food trucks that advertise cannabis products in neon lights to brazen storefronts with fully stocked shelves. In many of these places, a consumer purchases something like a sticker or a t-shirt, and then is given the cannabis in addition to that item; in this way, the cannabis is not being directly purchased. Some of these entities even claim to be “licensed,” though cannabis regulators have issued zero licenses for adult use cannabis sales.
When asked in June at a cannabis conference called CWCBExpo about enforcement related to unlicensed sales, the chair of the Cannabis Control Board, Tremaine Wright. said that “this is our window for education.” But, she added, “This isn’t a window forever.”
State regulators have reminded New Yorkers at meetings and events this year that adult use sales are not yet legal. But outside of the few dozen cease and desist orders regulators sent, and scattershot enforcement in places like Times Square, no comprehensive plan is in place for what to do about these shops.
Still, because the illegal shops threaten to undermine a legal industry that is intended to uplift communities harmed by prohibition, such plans may not be far away, even though leaders have somewhat different ideas about how to proceed.
Last Friday, State Senator Brad Hoylman, Assembly Member Dick Gottfried, and Council Member Erik Bottcher sent a joint letter to Mayor Eric Adams, asking him to act on unlicensed sales.
Hoylman’s office identified “over two dozen storefronts or mobile stores” in his district that sold cannabis “to the public as if they had a valid license to do so.” Hoylman represents a chunk of Manhattan including Midtown, the East and West Villages, and parts of the Upper West Side.
Hoylman told Cannabis Wire that, in hindsight, perhaps elected officials could have “predicted that, with the decriminalization efforts,” some folks would seize the moment to pop up unlicensed cannabis businesses and “take advantage of this interim period.”
But, Hoylman added, “I don’t think anyone would have predicted it would have been as widespread as we’ve seen in parts of my district.”
Adams’ office told Cannabis Wire that they are “actively working to identify” areas where unlicensed cannabis is sold, which will be followed by the “proper steps to confiscate those items.”
“Mayor Adams has been very clear that New York City will not tolerate businesses selling cannabis if they are not licensed legally,” Adams’ deputy press secretary Kayla Mamelak told Cannabis Wire. “However, the administration is ready to assist all eligible business owners in the gray market get their applications submitted to the state through our services at Cannabis NYC.”
Adams’ office also referenced NYPD-related enforcement. The NYPD told Cannabis Wire that members of law enforcement seized 19 vehicles in the Times Square area in August.
Further, as of August 19, a total of 190 calls have been made for “Cannabis Vendor Vehicles,” either to the non-emergency complaint line 311, or the emergency line 911.
Hoylman was clear that he isn’t advocating for any kind of “prohibition” mindset, because he is in favor of legalization. But, he said, unlicensed operators are a threat to consumers because they sell untested products—which means that consumers are in the dark about things like pesticides and potency—and they are a threat to the forthcoming legal market, including those who are seeking early licenses as “justice-involved” applicants. Operators of unlicensed businesses also don’t pay the state fees or taxes, which means that if they persist, they could undercut legal operators.
Gottfried echoed Hoylman’s points, telling Cannabis Wire that he supports civil—not criminal—enforcement.
State lawmakers pitched legislation this year to try to rein in unlicensed sales, but nothing made it to Governor Kathy Hochul’s desk. Senator Liz Krueger, one of two authors of the Marihuana Regulation & Taxation Act, introduced Senate Bill S9452 shortly before summer break. It passed out of the Senate but didn’t have time to gain traction in the Assembly.
The bill—which, Krueger told Cannabis Wire, was drafted in conjunction with the Office of Cannabis Management—would have made it a Class A misdemeanor for a “distributor of adult-use cannabis products or a retail seller of adult-use cannabis products to sell any such products while not registered to do so.” The legislation also would have given the Commissioner of Taxation and Finance the power to “revoke the certificate of registration of the sale of adult-use cannabis” and given the Office of Cannabis Management more latitude to “provide enforcement.”
Krueger, who represents a large section of the east side of Manhattan, said that she’s been “fairly outspoken for probably a year now on the importance of cracking down on the illegal shops and vans popping up all over the state.”
“I’m disturbed to see some people selling products that clearly are marketed to children, even though my law is explicit not to market to children, not to sell to people under 21, to know exactly what it is you’re selling and someone is buying,” Krueger told Cannabis Wire.
Come January, Krueger plans to reintroduce her bill.
“I absolutely am going to continue down that path in January. But again, I will, as is my philosophy, do this in conjunction with” the Office of Cannabis Management, Krueger told Cannabis Wire. (The Office of Cannabis Management did not respond to requests for comment by deadline. This story will be updated with any comments.)
Today, Krueger said, enforcement “really varies by locality.” In her backyard, for example, she worked with the NYPD to have food truck-style vehicles that sold cannabis removed from the East 86th Street corridor.
“Frankly, the messaging we’ve really been trying to get across to anybody and everybody who thinks they’re going to jump ahead of the law,” Krueger said, is, “‘Guess what? You’re not getting a license to do this legally.’”
Senator Diane Savino, who represents a swath of Brooklyn and Staten Island, said that the cannabis sales taking place right now in New York are a “blatant exploitation of what some people call loopholes in the law.”
But Savino doesn’t agree. “I’m sorry, I don’t see any loopholes anywhere,” Savino told Cannabis Wire, reiterating that all nonmedical sales are currently unlawful.
Nonetheless, Savino introduced Senate Bill S8511, which aimed to further “define unlawful activities of person’s utilizing commercial establishments as a front to distribute cannabis in violation of the Cannabis Control Law.” The bill stalled in committee.
Savino said that she thinks there has been a “change in mentality among some of the members in the Senate, the Assembly, because they want to see this program be successful.”
“You cannot have a legal, regulated market and ignore the illicit marketplace,” Savino said. “So if people think they’re going to get away with it, good luck to them. We’re coming after you.”
Savino said that she’s “serious” and that she’s meeting with the NYPD and the Richmond County District Attorney’s office to “focus” on Staten Island.
“You’ll see that replicated in other boroughs,” she told Cannabis Wire. “We owe this to the fledgling entrepreneurs, to the people who are willing to put their life savings on the line, to those who are willing to risk everything to the legal marketplace. We owe them this.”
City Council Member Justin Brannan, who represents a district that includes Bay Ridge, Brooklyn, told Cannabis Wire that he’s used to seeing smoke shops that sell things like pipes and bongs in New York City. But shops outright selling cannabis have “escalated.”
“They’re not licensed to do this stuff. So they’re obviously taking advantage of this purgatory that we’re in right now and this sort of gray area,” Brannan said.
And it’s “concerning” Brannan said, that the “licenses are going to be worthless and the tax revenue is going to be a very far cry from what we all anticipate,” adding, “If I’m a guy who went through hell to get a license, I’m going to be really upset.”
Brannan’s office identified roughly two dozen shops in his Brooklyn district that appeared to be fully operational unlicensed dispensaries. Brannan said his office shared the locations of these unlicensed shops directly with the Office of Cannabis Management.
“They’ve been very responsive and they understand,” Brannan said. “But, I don’t know if they share our urgency, let’s say that.”
Meanwhile, City Council Member Gale Brewer, who represents the Upper West Side, described an “avalanche” of complaints about entities selling cannabis. Brewer told Cannabis Wire that she’s personally visited many of the convenience shops that are selling cannabis products, and that she fears these products are ending up in kids’ hands.
“I’ve gone to as many of these stores as I can to give them my card,” Brewer said. “The police department is aware of it. But the problem is, I don’t really know what the game plan is for all of these stores.”