Need assistance getting a cannabis business license? Schedule a Free Consultation
ALBANY, N.Y. (WETM) – On the eve of the unofficial cannabis holiday known as “420,” Governor Kathy Hochul announced new efforts to shut down unlicensed marijuana shops. They include giving local authorities the power to immediately padlock stores caught selling illicit cannabis.
Landlords who “turn a blind eye” to illegal cannabis sales could also face a $50,000 fine in New York City, or “five times the rent from the time the landlord was notified of the violation outside of New York City.”
“This is a great day, we’ve waited far too long for this reckoning with all of the illegal shops, and your day has come,” Gov. Hochul said in a press conference.
The Governor was joined by New York State Police Superintendent Steven James; Daniel Haughney, the Director of Investigation and Enforcement of the Office of Cannabis Management; New York City Sheriff Anthony Miranda, New York City Mayor Eric Adams, New York City Councilmember Gale Brewer; and Osbert Orduna, Chief Executive Officer of ‘The Cannabis Place’ dispensary in Middle Village, Queens.
Governor Hochul detailed a five-point plan:
Padlocking Illicit Storefronts
The FY25 Budget delivers on Governor Hochul’s committed to give broad padlocking authority to the Office of Cannabis Management (OCM). OCM will be authorized to padlock businesses immediately following an inspection if they are selling illicit cannabis and pose an imminent threat to health and safety for the following reasons:
- Sales to minors
- Unlicensed processing of cannabis
- Violent conduct
- Presence of unlawful firearms
- Proximity to schools, houses of worship or public youth facilities
- Products leading to illness or hospitalization
- Products not tested or labeled according to NY Law
Additionally, authorities from counties and cities, including New York City, will be authorized to padlock unlicensed businesses.
In addition to expanding padlocking authority, the Budget establishes a misdemeanor penalty for damaging or removing a padlock. This addresses previous limitations that beleaguered padlocking efforts statewide.
If a business is found to not meet the standards of imminent harm required for padlocking, OCM will issue a notice of violation and an order to cease unlicensed activity. These stores will be padlocked upon reinspection if unlicensed sales activity is still ongoing. If the store has approval from a state agency to sell alcoholic beverages, lottery tickets, or tobacco and vaping products, OCM will send a notice to the relevant state licensing agencies to inform of a violation under the cannabis law, and the business will be warned they are at risk of losing their licenses. OCM will immediately padlock a business following a reinspection if the unlicensed activity is continuing, even absent imminent threat. For all hearings, OCM, upon request must provide a hearing within 3 days, and a decision within 4 days after that.
Actions Against Landlords Who Fail to Cooperate With Cannabis Law
Under the FY25 Budget, Governor Hochul is cracking down on landlords who turn a blind eye to the illegal activity under their purview. If landlords fail to bring forth eviction proceedings against tenants in violation of the cannabis law, they will be held to strict penalties including:
- A $50,000 fine for any landlord notified of the violation within New York City
- Five times the rent from the time the landlord was notified of the violation outside of New York City
The FY25 Budget also lowers the standard of proof required to evict a tenant in violation of cannabis law. Landlords will now only have to prove that a business is “customarily or habitually” engaged in selling cannabis without a license, rather than “solely or primarily” doing so.
Expanding Local Authority
Counties and cities, including New York City, will be able to adopt laws related to regulating unlicensed cannabis businesses. The local laws must ensure consistent enforcement by requiring the establishment of procedures to conduct inspections, hearings, and emergency padlocking of businesses that mirror the state’s processes.
Localities outside of New York City must designate a point of contact to coordinate with and report on enforcement activities with OCM, and they must require hearings in city or county courts within three days and decisions in four days following the hearing for locations that were padlocked at first inspection due to imminent harm.
Local governments will now be able to initiate emergency proceedings against both unlicensed businesses and landlords. This allows localities to establish their own orders to cease unlicensed activity (upon 10-days’ notice to OCM), and they may collect penalties through those proceedings.
Creating a Statewide Enforcement Task Force
Governor Hochul is launching a statewide task force to carry out civil enforcement to close illegal stores. By going after suppliers and taking on the pipeline of illegal cannabis these stores rely on, New York is taking on the root causes of the issue. And through fostering collaborations on this issue between State Police and local law enforcement, the state will be equipped to tackle the full scope of illegal cannabis activity.
Granting New York City Immediate Enforcement Powers
The New York City Administrative Code will be amended, allowing the City to act under the law immediately. This amendment will allow the City to inspect, issue violations, and seize cannabis and padlock stores. Additionally, the Sheriff’s Office will be designated as the lead under the law and can deputize other personnel to assist in enforcement.
New York City will be able to conduct administrative hearings within five days of execution of an emergency padlock order and will provide a decision within four days after the hearing. The legislation allows the New York City Council to amend the law at a later date.
“I’m glad it’s finally here and that it’s finally happened.,” said Elmira Mayor Dan Mandell.
“They’re finally going to give local municipalities the authority to shut these illicit cannabis distributors down, so I’m very very happy to see this new legislation.”
“First of all, on the revenue side, with an illegal dispensary, we get 3% of the revenue that the dispensary makes. We don’t get that with these illegal dispensaries,” said Mandell.
“Second of all, this is unregulated marijuana. We don’t know what’s in it, what they may have mixed in with it. It could be very unsafe, so it could be a community health hazard. Obviously, we want the legal dispensaries to open, we don’t want these illegal dispensaries operating in the city.”
In a statement, Watkins Glen Mayor Laurie DeNardo told 18 News: “We surely welcome the help from the Governor’s Office as municipalities have been left to try and close the illegal shops with our own resources as the Cannabis Law and Board didn’t have enough teeth out the gate.”
Chemung County Sheriff Bill Schrom told 18 News: “I’m happy the Office of Cannabis Management now has more bite behind the bark, but this should have been in place since the beginning, and not let these stores get established and make money hand over fist. This is another example of putting the cart before the horse.”
“A day ago, I stood here talking about my promise to protect small businesses from the scourge of retail theft,” Governor Hochul said. Well, I made another promise to the legal cannabis dispensaries, and the communities where illegal shops seem to line every corner.”
“The illegal operators who flout the rules, because they know at most they will be slapped with a fine, that they have also figured out will take months and months to collect, if ever. Frustrated local leaders have been powerless as these unlicensed shops operate right under their noses, sowing chaos, destabilizing neighborhoods, and attracting other types of crime.”
“Licensed owners like Osbert and so many others like him, they stake their entire futures on New York’s legal cannabis industry,” Governor Hochul said.
“They did everything right. They pay their taxes, source their product from New York farms, and they don’t sell to minors. And yet, they’re forced to compete with rampant bad actors who play by an entirely different set of rules. People who run these illicit shops engage in fraudulent advertising about what’s in their products because they don’t really care about your health.”
“They’ll source their product from anywhere, because they don’t care about New York farmers. They’ll sell cannabis, gummy rings, ice cream cones, chocolate bars, because they don’t care about your kids. And they’ll evade the taxes because they don’t care about the communities where they operate.”
“In doing so, they make a mockery of our laws and believe that nothing will ever stop them. And until today, they’ve mostly been right. My friends, the insanity stops right now. Why? Because I kept my promises, we kept our promises in doing exactly what we said we would do. 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.”
You can watch the full press conference here.
You can watch the full interview with Mayor Mandell below:
