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New York’s small landlords are “overwhelmed” with unlicensed cannabis tenants.
The Real Estate Board of New York hosted an online event this week titled “Unlicensed Cannabis Shops and the Real Estate Industry: Laws and Liabilities.”
Speakers included Jasmine Norman, deputy general counsel with the Office of Cannabis Management, and Robin McCabe and Michael Meade from the District Attorney’s Office. The presentations and Q&A portion of the event were targeted toward building owners, landlords, and real estate agents.
While exact data are unknown, the city estimates north of 1,500 unlicensed shops are in New York City alone. These unregulated sellers are threatening the nascent legal market, and also exposing landlords. City and state lawmakers have passed legislation that would penalize landlords who allow unlicensed sellers in their property.
“Addressing this proliferation has been a challenge for law enforcement and regulators alike,” McCabe said. “If you provide commercial leases for this type of business in New York City, chances are they are selling cannabis without a license and other illegal products such as untaxed cigarettes and they are selling to minors.”
Norman and McCabe gave overviews of the state’s cannabis law and enforcement tools, including newly implemented ones to help evict unregulated sellers. McCabe outlined a four-tiered approach, starting with criminal prosecutions focused on owners of unlicensed businesses because it’s a “more effective and lasting approach.”
One theme that came up was a fair bit of confusion and frustration, topics that are not new in New York.
“It’s a quality of life issue, but it is also an economic issue for so many building owners who have ground floor retail spaces where they are leasing to what they perhaps thought was a convenience store or some establishment that was purported to be one thing, and then all of a sudden it turns into another,” said Michael Taubman, the membership and communications director for the Rent Stabilization Association.
Ann Korchak, president of the Small Property Owners of New York, agreed.
“There’s a lot of particularly small owners that are being overwhelmed by what’s happening in the quick spread of cannabis shops,” Korchak said. “Many of our owners have told me they’ve entered into a lease transaction with somebody and then the business they started operating is not at all what they had agreed to with the lease terms.”
Norman, from OCM, also talked about an “affirmative defense” of sorts that landlords have.
“What can a landlord or building owner do? Generally speaking, landlords can defend themselves against alleged violations by proving that they started eviction proceedings against the illegal retail shop,” Norman said.
Upcoming clog: Here’s what could slow New York’s cannabis rollout next.
The Queens Borough President hosted a meeting focused on cannabis this week that brought together the 14 Queens Community Board chairs. The takeaway is that localities are struggling to handle the initial wave of interest from aspiring cannabis business operators, who are required to submit notifications of their intent to operate to localities.
Many chairs are frustrated that CBs, already understaffed and overworked, are now being tasked with important aspects of the licensing rollout, and they’re saying they need a lot more time.
As Cannabis Wire recently reported in this newsletter, CBs have been flooded with outreach.
The point of the meeting was for local leaders to hear short presentations from Cecilia Oyediran, a senior outreach associate with the Cannabis Workforce Initiative and Katie Shane, deputy political director of Local 338. The meeting, however, shifted to whether regulators have done enough to work with local leaders as they roll out the adult use licensing window.
Dolores Orr, who represents Community Board 14 in Far Rockaway, said that of the three notices she received, two were from Nassau County, Long Island, and one was from Colorado.
“If we’re looking for equity in our communities, is there going to be a preference for New York City applicants?” she asked, and questioned whether approving these applications would meet the law’s equity goals.
Meanwhile, some local leaders feel like they’re being put in a tight spot in deciding between applicants that might submit notices at the same time for locations near each other, which Community Board 1’s Marie Torniali referenced.
Vincent Arcuri, who represents Community Board 5, a region of Queens, including Ridgewood and Glendale, said that he has fielded applications that list “duplicate” spots, or the same locations.
“You’re not giving us enough time. We need like three months in order to react to something. Even if it was one applicant,” Arcuri said.
Security trade group updates its cannabis guide.
The Security Industry Association announced this week that it will release the 2023 edition of its Guide to Cannabis Security Requirements, which was first published in 2020, during ISC East, a security event that will take place in New York City next month.
The guide includes “common security requirements included in the comprehensive security regulations for states that have legalized and legislated marijuana or cannabis products, summaries of state-specific mandatory requirements for marijuana establishments across areas including video surveillance, access control, alarm systems and security personnel, additional resources and relevant links for further information.”
