The governor of New York unveils a plan to crack down on illegal pot shops

New York Gov. Kathy Hochul on Wednesday unveiled new legislation aimed at tackling the state’s hardline illegal cannabis traffickers. The bill, already supported by dozens of lawmakers in the New York State Senate and State Assembly, also gives regulators, including the Office of Cannabis Management and the Department of Taxation and Finance, more power to enforce regulations and shut down businesses that do dealing with illegal cannabis sales.

“For the past few weeks, I have been working with the Legislature on new legislation to improve New York’s regulatory structure for cannabis products,” Hochul said in a statement from the governor’s office. “The persistence of illegal pharmacies is unacceptable, and we need additional enforcement tools to protect New Yorkers from dangerous products and support our justice initiatives.”

New York legalized recreational cannabis in 2021

New York legalized adult-use cannabis in 2021, and the first recreational marijuana dispensary opened its doors in Manhattan late last year. So far, however, only four Conditional Adult Use Retail Dispensary (CAURD) retailers have opened statewide. Meanwhile, the number of unlicensed pot shops has skyrocketed, prompting operators in the burgeoning licensed cannabis industry and others to urge state officials to crack down on illegal operators.

Under the proposed legislation, announced by Hochul on Wednesday, New York’s tax and cannabis laws would be amended to allow the Office of Cannabis Management (OCM), the Department of Taxation and Finance (DTF) and local law enforcement to impose restrictions on unlicensed businesses enforce pharmacies. The legislation does not impose new penalties for the possession of cannabis for personal use by an individual and does not allow local law enforcement officials to conduct marijuana enforcement actions against individuals.

“This legislation would, for the first time, allow OCM and DTF to take action against unlicensed activity, protect New Yorkers, and ensure the success of new cannabis businesses in New York,” the governor’s office wrote. “The legislation would restructure current penalties for illegal cannabis to give enforcement powers to DTF peacekeeping officials, create a manageable, credible and fair enforcement system, and impose new penalties on retailers who evade state cannabis taxes.”

The bill clarifies and expands OCM’s powers to seize illicit cannabis products, establishes summary procedures for OCM and other government agencies to shut down unlicensed businesses, and provides a framework for more effective inter-agency cooperation efforts.

Violations of the law could result in fines of $200,000 for illegal cannabis plants or products. The legislation also allows the OCM to fine companies up to $10,000 a day for selling cannabis without a state license.

Elliot Choi, chief knowledge officer for cannabis and psychedelics at law firm Vicente LLP, hailed the use of fines instead of jail time to dominate the illicit cannabis market in New York.

“Governor Hochul’s proposed legislation is warmly welcomed as previous efforts to combat illegal pharmacies appear to have had little effect,” Choi wrote in an email to High Times. “We support the use of fines as opposed to incarceration to avoid recriminalization and return of anything resembling the earlier failed war on drugs.”

In addition to fines for unlicensed cannabis operators, Choi said punishing property owners who rent to unlicensed businesses would also be an appropriate tool for state cannabis regulators, and called for increased funding for state agencies tasked with controlling underground operators are.

“Landlords should have no incentive to rent to illegal operators and should be financially penalized for doing so,” Choi said. “Finally, both the OCM and the Department of Taxes and Finance will need additional resources to enforce it, as the OCM already has enough to do to finalize the regulations and issue the appropriate licenses in a timely manner.”