New York Gov. Kathy Hochul has a message for unlicensed cannabis operators: “enough is enough.”
On Friday, ahead of 4/20, Hochul held a news conference to lay out how the state will soon radically shift its approach, thanks to agreement in Albany on enforcement legislation that will be included in the state budget.
Hochul was surrounded by state and local officials who have been most vocal and persistent about these unregulated cannabis sellers: New York City Mayor Eric Adams; New York City Sheriff Anthony Miranda; Dan Haughney, Office of Cannabis Management’s director of enforcement; and New York City Councilmember Gale Brewer, among others. Hochul also shed some light on how enforcement will change, particularly in New York City.
In the three years since the Marihuana Regulation and Taxation Act (MRTA) was signed, legalizing cannabis for adults in the state, unlicensed cannabis sellers have proliferated, with a concentration in New York City. New York lawmakers at the state and city level started calling for a more streamlined process to shut down unlicensed shops, which estimates put at 1,500 to 2,000. While Hochul expanded enforcement through her budget last year, it wasn’t enough, so Hochul returned with a new plan in her budget in January.
“The insanity stops right now. Why? Because I kept my promises,” Hochul said. “I’m using the power of the state budget to give us the tools we need at the state and local level to shutter these illegal shops once and for all. We got it done.”
Hochul gave some details about the new five-point plan in the budget legislation.
Point 1: the ability for state officials to “padlock” unlicensed sellers for up to a year, which Hochul highlighted while holding up a small padlock. Stores will be padlocked “immediately,” she said, and that padlock can stay on while the unlicensed seller winds through the hearing and appeals process.
Point 2: Local governments will have the authority to create their own laws to padlock unlicensed shops, which is a lever that New York City has been desperate to utilize.
“Shockingly, the way this was designed, localities were stuck on the sideline in this fight that ends right now,” Hochul said.
Point 3: “Rooting out” unlicensed cannabis products at bodegas and smoke shops by going after other licenses.
“We’re not out to close down bodegas, but under our new law, we’ll notify bodega owners if they continue to sell illegal products, we’ll take away their liquor, tobacco, and lottery licenses. And if they still don’t comply, then we can put a padlock on their doors,” Hochul said.
Point 4: Hitting landlords with even steeper fines if they knowingly rent to unlicensed sellers. Hochul said these fines would be “up to $50,000.”
Point 5: The creation of a collaborative statewide task force that will “carry out civil enforcement to close the illegal stores.” More details are coming on this taskforce, but Hochul said that her office is recruiting agencies to join the State Police, and that they’re going to aim to start by “going after their suppliers and busting up the pipeline of illegal cannabis coming in from other states,” which is what the “illegal storefronts are relying on.”
Mayor Adams said that unlicensed shops in New York City are “impacting our quality of life” and that the issue comes up at every town hall he’s recently hosted.
“This illegal market has destabilized the legal market,” Adams said, praising the new budget plan as “bold.”
More than once on Friday, officials addressed concerns that New York would be taking a step toward re-criminalization with the enforcement package.
“It could have been a contentious battle as people were really weighing on, are we going backwards? Are we going to criminalize those who use legal cannabis?” Adams said. “This is not a step backwards. This is a step forward to ensure we have legalized cannabis shops.”
New York City Councilmember Gale Brewer has been among the most outspoken elected officials in the state on unlicensed cannabis shops. Brewer’s office has been surveying unregulated cannabis stores in her district since last year, and eagerly anticipating the legal shops that arrived this year.
“The two legal stores that have opened out of 90 illegal ones on the Upper West Side are fantastics,” Brewer said.
Hochul made it clear that the unlicensed shops wouldn’t “disappear overnight.”
“They got a head start. There’s a lot of them out there,” Hochul said. “But New Yorkers eventually will see a change in their communities.”
There were other closely-watched cannabis items under negotiation this budget cycle. One that made it across the finish line is the repeal of the potency-based tax in favor of a wholesale excise tax. One that didn’t is a fund for struggling cannabis farmers.
New York’s cannabis farmers have faced difficult financial pressures as they waited for legal shops to get licensed. While the Senate and Assembly both passed versions of a fund to help lift up struggling cannabis farmers, Hochul didn’t bite.
Sen. Michelle Hinchey, chair of the Senate Agriculture Committee, and Assemblymember Donna Lupardo, chair of the Assembly Agriculture Committee, released a joint statement on Friday expressing disappointment.
“It is very disappointing that we were unable to reach an agreement with the Governor. We have a fundamental obligation to protect NY’s cannabis farmers who grew in good faith and wound up with few places to sell their crops; crops that have since lost value, leaving farmers in the red,” they wrote. “While we appreciate the effort to close illegal stores, making way for more locally grown products, it is too late for many farmers who can no longer afford to stay in business.”
