Manhattan’s top prosecutor will now go after the landlords who are leasing to unlicensed cannabis sellers.
Manhattan District Attorney Alvin Bragg laid out the plan on Tuesday afternoon alongside Mayor Eric Adams and a handful of other officials at the Goddard Riverside Community Center on the Upper West Side, a Manhattan neighborhood dotted with unlicensed cannabis shops. Other officials speaking on Tuesday included Office of Cannabis Management Executive Director Chris Alexander, New York City Sheriff Anthony Miranda, New York City Corporation Counsel Judge Sylvia Hinds-Radix, Manhattan Borough President Mark Levine, and City Council member Gail Brewer, who is also the chair of the New York City Council Committee on Oversight and Investigations.
On Tuesday, Bragg said, his office sent roughly 400 letters to Manhattan-based smoke shops, informing these entities that the DA’s office will use its civil authority to “require owners and landlords to commence eviction proceedings against commercial tenants who are engaged in illegal business activity,” including the unlicensed sale of cannabis and untaxed cigarettes.
And, if those owners and landlords look the other way and don’t evict unlicensed cannabis sellers, the DA’s office will step in, Bragg said.
“My office is prepared to take over and pursue eviction proceedings,” Bragg said.
The state and city’s highest regulators and officials continue to walk a difficult line of curbing the illegal market while not over criminalizing activity now legal under state law – which, if it unfolds as written in the bill and in regulations – will be the country’s most equitable to date.
“While we are not ruling out criminal prosecutions for tax evasion, money laundering, or the sale of cannabis to minors, the focus of this initiative at this time is civil enforcement. We want to give New York’s legal cannabis market a fair chance to thrive and give New Yorkers the security of knowing that a safe, orderly system is in place for cannabis dispensaries,” Bragg said. “Advocates fought hard to put racial equity at the center of New York’s cannabis legalization regime.”
As far back as September, as Cannabis Wire reported, lawmakers had started calling for more tools to curb the state and city’s sprawling unlicensed cannabis sales, especially as regulators ramped up the regulations to guide the state’s forthcoming industry.
Then, in late December, the state’s first legal cannabis shop opened. Housing Works Cannabis Co, a Conditional Adult Use Retail Dispensary (CAURD) license holder, is part of a broad equity effort that lawmakers and regulators have pushed to give “justice-involved” individuals and organizations a headstart in the state’s legal cannabis industry. In other words, New Yorkers who were harmed by the disproportionate enforcement of previous cannabis laws, and organizations working to repair those harms, will run the state’s first legal adult use shops – including before the big multistate operators who currently dominate the state’s medical cannabis industry. One other CAURD license holder has opened their doors since.
Alexander said he is “proud to be changing the mold of what the cannabis industry can look like.”
“But,” Alexander added, “we cannot do that while we have these illicit shops draining necessary resources from our program and confusing the public. So we are really eager to continue to take on this work.”
In the numbers game, New York’s licensed adult use shops are losing – big time. Roughly 1,400 unlicensed shops have opened their doors in Manhattan, nearly a dozen within walking distance of the state’s only two legal shops. The data about the number of unlicensed shops were made public at a Jan. 18 joint New York City Council committee hearing hosted by Council Members Gale Brewer, Marjorie Velázquez, and Lynn Shulman.
“Those legitimate businesses face stiff competition from shops that are not following the rules. It is time for the operation of unlicensed cannabis dispensaries to end,” Bragg said.
Adams pointed to a recent spate of robberies at New York City smoke shops and unlicensed sellers, which have been reported from Midtown to the Upper West Side.
“People realize that this is a cash business. They are targeting these businesses and it is causing a level of robbery in these locations,” Adams said. “So, this holistic civil approach is also going to be connected to a public safety mechanism as well. You can’t just open a shop and sell marijuana. There are rules and we must abide by those rules in a very real way.”
Bragg said the DA’s office will be looking at geographic “priorities,” including the “cluster around the two that are operating legally, and locations that are a “magnet for other criminal activity.”
Bragg compared the approach to cannabis to the city’s coordinated approach on guns.
“We’re looking at those few who are harming the most of us. We’re strategic. We are smart and we are targeted. And we’re going to bring that same rigor to bear to this issue,” Bragg said.
What about Queens, Brooklyn, Bronx, and Staten Island? Adams said the Manhattan DA’s plan for unlicensed sellers will be “shared” with the other four boroughs.
“It is important to use what the DA is doing here. They share information, they share best practices. We’re all in one city,” Adams said. “These are laws on the books. We’re not going to allow people to weigh how much money they’re making, how much the fines are, and say these are the cost of doing business. That can’t happen.”
Unlicensed cannabis retailers found an opportunity when, during the earlier days of the pandemic, plenty of businesses shuttered and left empty storefronts. The “proliferation” of unregulated smoke shops “coincided with the COVID-19 pandemic, and that smoke shop operators were some of the only businesses opening brick-and-mortar locations amid pandemic-spurred vacancies and declining rents,” a committee report published ahead of this Council hearing noted.
Alexander said that every state that has legalized has had “some form of proliferation” of unlicensed sellers.
“Because this is New York City, it’s particularly bad. Because this is the city, this is the center of the world,” Alexander said. “At the same time, as we continue to roll out this market, as well as taking these necessary enforcement actions, that’s the kind of recipe that we need in order to really deter consumers from going to the illicit markets.”
Brewer, who spoke about a survey of the Upper West Side that her office conducted, which yielded dozens of shops in the neighborhood that Brewer represents – now up to 63 – thanked New York City Sheriff Anthony Miranda and Bragg for “finding another way to close down these damn smoke shops.”
Levine pointed out that unlicensed shops in New York City have cannabis products seized, the sellers are fined, but the stores remain open.
“Why is that?” Levine asked on Tuesday.
“They’re making so much money that they are seeing the lost product and the fines they’re paying as just a cost of doing business and they’re continuing to operate,” Levine said. “Now, this strategy of taking their leases, that’s at a whole ‘nother level. And we know from more difficult times in the 70s, 80s and 90s that that actually works. And I do believe this will work.”
