As New York’s cannabis regulators prepare to issue the first licenses for adult use cannabis retail shops, as soon as Monday, one question on stakeholders’ minds is: what’s the specific plan for the unlicensed shops continuing to pop up across the state?
In a conversation with Cannabis Wire earlier this month, Cannabis Control Board Chair Tremaine Wright said that regulators are enforcing against unlicensed cannabis sales in an “ongoing” manner, using tools like violations related to taxes and food.
Meanwhile, Assembly Majority Leader Crystal Peoples-Stokes and Sen. Liz Krueger, the two lawmakers who wrote the Marihuana Regulation & Taxation Act, hold different views on how best to proceed.
But this week, there was a sign of what could come: New York’s Office of Cannabis Management worked with the New York City Sheriff’s Office to conduct the first coordinated raid of a brick and mortar unlicensed cannabis seller in New York City. As it unfolded, a woman wearing a jacket with the lettering “NYS OCM ENFORCEMENT” packed up bags of cannabis. The New York City Police Department showed up, too. (The NYC Sheriff’s Office is the civil enforcement arm of the New York City Department of Finance.)
Until now, the only formal statewide enforcement announcement from OCM has involved 52 cease and desist letters sent to unlicensed cannabis operators this summer. Otherwise, law enforcement against unlicensed cannabis sales has been scattershot, like the search warrant executed last month in the Village of Cazenovia, about a 30 minute drive from Syracuse. In New York City, it has largely and previously focused on the seizure and ticketing of trucks that quickly return to the streets, like Uncle Budd and Weed World, as Cannabis Wire has reported.
But enforcement like what happened in Brooklyn this week is expected to “ramp up,” an OCM spokesperson told Cannabis Wire on Thursday.
Regulators plan to award the first Conditional Adult Use Retail Dispensary (CAURD) licenses at the next Cannabis Control Board meeting on November 21. In other words, the first legal adult use cannabis sales are around the corner, as regulators have repeatedly said they will come before the end of 2022.
Shortly after regulators revealed that the first licenses were forthcoming, Cannabis Wire asked Wright what regulators are doing about unlicensed sales that could threaten CAURD license holders who will have to compete with unregulated and untaxed, and therefore cheaper, products.
“We are currently working in partnership with all of the municipalities, because laws already exist for how we regulate businesses. And, largely, the problems that are being identified are businesses that are operating out of compliance,” Wright told Cannabis Wire on November 3.
Any sales currently taking place in bodegas, converted food trucks, or pop-up shops, are unregulated, meaning those products are untested for things like potency or heavy metals. The only cannabis sales currently regulated in the State of New York are through one of the existing licensed medical cannabis shops, known as Registered Organizations.
“Simply put: you need a license to sell cannabis in New York. If you do not have one, you are not selling cannabis legally. The Office of Cannabis Management implores all illegal store operators, including stores pretending to be legal operations, to stop selling cannabis products immediately or risk facing additional consequences,” OCM spokesperson Aaron Ghitelman told Cannabis Wire. “We are actively working with local law enforcement agencies and have jointly investigated unlicensed shops in their municipalities. We will continue to work with our local partners until these operators shut down and with the Cannabis Control Board, which has the authority to permanently bar them from the industry.”
Wright said that regulators are looking at, and in some cases using, existing rules in areas like “health, traffic, food and beverage” to “help manage this problem currently.”
“We’ve seen seizures of vehicles. We’ve seen restaurants and stores shut down upstate. And we’re continuing the partnerships because the tools already exist. We don’t have to create something new. We have a lot of the tools in hand,” she said.
Cannabis Wire has reported at length about the sprawling unlicensed cannabis sales throughout New York State, which have become concentrated in New York City. On a recent November afternoon, five unlicensed cannabis operators were open for business between Broadway and the 96th Street subway stop and Columbia University. Storefronts populate busy commercial streets, from the East Village to Midtown to Harlem.
Wright said that regulators need to think about cannabis licensing and enforcement “holistically.”
“What is the wrongdoing that’s been identified? What is the action taken to cure or to stop the action? And sometimes it can be a mistake,” Wright said, giving the example of CBD. While the state has a license for CBD sales, “many of our small grocers didn’t even realize that it existed” and are carrying and selling CBD products anyway.
“Part of our work is to educate them and to let them know that there is actually a licensing process,” she continued. “So we really want to do some level of education before we think that it’s a punitive action that has to take place.”
Ultimately, businesses that don’t comply will “have to deal with New York State Tax and Finance because they are making sales that are not being taxed properly.”
“So that’s why I said we have a cadre of tools in the tool chest for us to use and we just have to use them. And I think that they are opening themselves up, particularly those who announce that there’s wrongdoing and that they are participating, that they will thereafter have to explain.”
Sen. Liz Krueger, who alongside Assembly Majority Leader Crystal Peoples-Stokes spearheaded cannabis legalization legislation for years before it was passed in 2021, introduced an enforcement bill at the eleventh hour of the last legislative session. It stalled before the legislature broke for the summer.
Krueger told Cannabis Wire in September that she intends to bring a similar bill back when the session reconvenes in January.
“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.
Peoples-Stokes did not support that bill, she told Cannabis Wire this month. Krueger “brought that enforcement bill back to last session. And it was not something I was willing to support at that time.”
“I’m not interested in criminalizing people around this plant at all. I am interested in figuring out how you shut down the illegal markets, because our legal market is never going to thrive,” Peoples-Stokes told Cannabis Wire. “I can’t say exactly what my position will be on that legislation. I can tell you that my staff and I are going to be meeting before the end of the year and we will come up with what that is.”
Update: This story has been updated with comment from the Office of Cannabis Management.
