New York Passes Long-Awaited Crackdown on Unlicensed Cannabis Retailers

May 3, 2023 New York, NY

By: Irina Dashevsky, Esq. and Ryan M. Holz, Esq.

New York just passed the State’s Budget Bill, which includes a critical provision that cracks down on the unlicensed cannabis retailers that have proliferated throughout the State and particularly in New York City. Licensed cannabis operators, as well as future licensee hopefuls, have eagerly awaited this move since such illegal operators have made it near impossible for state-licensed operators to compete (the latter group having to bear the burden of high taxes and operating costs). Beyond the business of cannabis, this is a significant, and important, step to ensure public health and safety in New York.

The provision allows certain enforcement agencies, such as the Cannabis Control Board (CCB), the Office of Cannabis Management (OCM), or the Attorney General, to personally serve a landlord or owner of real property with a notice requiring the owner/landlord to apply with a court to remove any commercial tenant using the real property for the unlicensed sale of cannabis. If the owner/landlord does not comply within five days or does not diligently prosecute the application for removal, the government entity providing the initial notice may initiate a proceeding on behalf of the owner or landlord to remove the tenant, naming the tenant and, notably, the owner/landlord as respondents. The legislation permits the court, upon finding that cannabis is being sold from the premises without a license, to: (1) order the immediate removal of the tenant; (2) impose a civil penalty on respondents not exceeding three times the amount of rent charged for the duration of the violation; (3) order respondents to pay attorneys’ fees and costs; and (4) make all respondents jointly and severally liable.

This is a serious effort by New York; the legislation gives the CCB and the OCM a powerful tool to use in the fight against unlicensed cannabis retailers. More importantly, the legislation goes to the root of the problem, which is landlords and owners allowing, tacitly or openly, the illegal sales of cannabis from their storefronts. Those landlords and owners are now forced to play a role in addressing the problem and enforcing compliance with cannabis laws. Landlords/owners will now face serious potential consequences for their actions (or inactions); the objective being that they are deterred from allowing such activity to continue.

Licensed, law-abiding cannabis entities should be encouraged by this development, but also cautious. Selling cannabis without a license has always been illegal in New York, and while there may have been enforcement hurdles, in the past the issue has been more about desire than ability. New tools or not, if New York law enforcement, the CCB, and the OCM, do not use those tools and exert immediate pressure, then nothing much will change. We are hopeful, however, that the many voices calling for change have been heard, and that this represents the beginning of more serious and expedited enforcement of New York cannabis licensing laws.

We will continue to monitor and report on developments in New York as they occur.

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New York Passes Long-Awaited Crackdown on Unlicensed Cannabis Retailers

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