Cannabis Management Authority’s December update on statewide enforcement against unlicensed shops

Today, New York state The Office of Cannabis Management (OCM) has released the third in a series of 2023 updates to enforcement measures against unlicensed cannabis businesses across the state.

Checks and Seizures: During the month of December, investigators from the OCM and the Department of Taxation and Finance (DTF) checked 48 shops, including 17 repeated checks, suspected of selling unlicensed cannabis. These inspections resulted in the seizure of 465 pounds of flowers, 537 pounds of edibles, and 35 pounds of concentrate with an estimated value of $4,260,000.

These actions brought a total of 381 inspections, of which 105 were re-inspected, and yielded more than 11,800 pounds of seized illegal cannabis, valued at more than $57 million. OCM and DTF investigators will continue to conduct weekly inspections across the state in 2024 to stop illegal operators as a new wave of legal dispensaries open their doors for business.

Big Chief Shut Down in Brooklyn: On December 20, investigators from OCM, DTF and New York state The Office of the Attorney General (OAG) has shut down and locked down Big Chief Smoke Shop, a formidable illegal cannabis business operating in Bay Ridge, Brooklyn, for operating without a license. Local community leaders vocally opposed the Big Chief Smoke Shop, and the local community council passed a unanimous resolution to shut down unlicensed shops in their neighborhood.

The petition filed by OCM and OAG seeks civil penalties against the owner of the building where Big Chief Smoke Shop is located for allowing an illegal business on their property. The owner of the building had previously been warned that he was operating an illegal business on their property, yet Big Chief Smoke Shop has remained open for over a year. Under the Cannabis Act, building owners can be fined $10,000 per day for allowing the unlicensed sale of cannabis on their property. The store owner faces millions of dollars in fines as a result of the December enforcement action.

The Authority and DTF continued an aggressive plan to implement their new enforcement agency against unlicensed retail cannabis operations. By the end of 2023, inspections were carried out in all regions New York: Western (Buffalo/Niagara); Central (Rochester, Syracuse, Utica, Ithaca); south level; capital region; Northern Land; Lower Hudson Valley; New York City; and Long Island. In addition to the initial inspections described above, ÚOHS and DTF carried out repeated inspections of the places to which notices of violations were issued during the initial inspection. These repeated inspections are conducted to determine whether the site continues to operate despite the cease and desist order, or whether they have in fact ceased their unlawful conduct. Those sites found to be operating in contravention of the original stop order are identified so that higher fines can be imposed.

By taking decisive action against unlicensed cannabis businesses, New York state takes significant steps toward stopping illegal and unlicensed cannabis operations that threaten public safety, consumer welfare, and the integrity of the state’s legal cannabis market.

Training for local law enforcement: With a continued focus on collaboration and coordination to maximize law enforcement partnerships, OCM hosted a training session on January 4 to provide essential education and resources on best practices and opportunities to shut down illegal operators for law enforcement partners across the state. The primary hearing was enforcement personnel at the command level. OCM was joined by the DTF Criminal Investigation Division, the New York County District Attorney’s Office, and Syracuse Corporation counsel, who all gave informative presentations on law enforcement and how to address the challenges posed by the illegal cannabis market.

“As we’ve said time and time again, the number one solution to the problem of these illegal businesses is to open more legal businesses. When New Yorkers choose to shop at a legal adult dispensary, they know where their products come from, that these cannabis products have been tested, and that these small businesses are reinvesting in our communities. We will continue with sixteen illegal products, and we know that collaboration at all levels of government continues to address this public health issue,” said Chris Alexander, executive director of the New York State Office of Cannabis Management.

Fines for illegal cannabis sales start at $10,000 per day and can go up to $20,000 per day for the most egregious behavior. Removal of the order may result in an additional fine of $5,000, and controlled businesses may also be subject to additional violations and penalties under the Tax Code. Implementing legislation passed in May 2023 also authorizes OCM to seek a state court order to eventually shut down businesses found to be repeat violators of the law. In addition, the law considers it a criminal offense to sell cannabis and its products without a license.

To bring many levels of government together to combat the illegal sale of cannabis, Governor Hochul previously announced a partnership between OCM and OAG through which municipalities across the state can receive training on how to use a specific provision – Section 16-A – of the new enforcement. a law signed by Governor Hochul in May 2023 to enforce padlock orders in state court. 16-A authorizes local governments, including county attorneys, with the approval of the OCM, to enforce padlocking injunctions against an unlicensed cannabis business found to be engaging in egregious conduct. This authority greatly increases the ability of various levels of government to work together to stop illegal cannabis operators.

In addition to these new local partnerships, the governor announced that other state agencies will now shoulder the weight of their business enforcement powers as part of the state’s creative and aggressive approach to combating the illicit market. The Department of Labor and the Workers’ Compensation Board are joining these efforts to ensure that businesses selling cannabis without a license comply with New York state labor and workers’ compensation laws.

This approach, which combines the enforcement powers of labor law, tax law and cannabis law, can result in non-compliant business owners facing tens of thousands of dollars in fines for a single inspection and violation of the law, significantly strengthening the state’s ability to intervene against those engaged in illegal sales, and reaffirms the Governor’s deep commitment to ensuring that the law is upheld and that New Yorkers are protected from potentially dangerous products.

New York state currently has 45 licenses cannabis dispensaries for adults. All regulated, licensed dispensaries must disclose Dispensary Verification Tool sticker near their main entrance. Any cannabis store that does not display this sticker is operating without a license.

Pursuant to Article 2 of the Cannabis Act, S.11(15), the Cannabis Management Authority issued 2023 Enforcement Report which represents the work of the OCM enforcement department over the past year, when the Office took action against unlicensed illegal cannabis retail outlets.

SHOP PRODUCTS, SERVICES AND GOALS prepared by HWM GREEN BOOK.

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