New York Regulators Again Promise to Crack Down on Unlicensed Smoke Shops

June 3, 2023 · Green Market Report

A top New York state cannabis official vowed to quickly bring the heat now that Albany has granted regulators the power to shut down hundreds of unlicensed smoke shops across New York City.

“We are pivoting so that we can begin as soon as possible,” said Tremaine Wright, chair of the New York Cannabis Control Board. “It is coming.”

Wright told Crain’s at an industry conference Thursday at the Javits Center that her agency would work with state tax agents, local police and consumer-protection officials to rein in the estimated 1,500 unlicensed retailers around the city that sell pre-rolled joints, edibles and other forms of marijuana. Authorities are also investigating landlords who rent them space.

In the last two years, unlicensed cannabis shops have spread across the city like a weed because profits, after rent and other expenses, range from $1,000 to $15,000 a day, according to Paula Collins, a Manhattan attorney who specializes in the business of cannabis.

Apart from sheer numbers, unlicensed operators enjoy key advantages over licensed rivals. For example, they can accept credit cards if they’re willing to deceive payment processors about the nature of their business, while the five licensed shops in Manhattan only accept cash or debit cards.

The Adams administration has mostly treated unlicensed weed shops gently. After the city sued a bodega at 736 Broadway earlier this year for selling bootleg cannabis close to a licensed dispensary, a settlement was quickly reached stipulating the shop owner would scale back so that cannabis products take up no more than 20% of the store’s space.

“Continuing to sell these products will give my [business] an edge over other, more traditional convenience stores, especially with the proximity of the retail cannabis dispensary down the block,” read a new business plan filed by the bodega owner in New York state Supreme Court.

Wright indicated the days of treating unlicensed operators with kid gloves ended in May when Gov. Kathy Hochul signed legislation granting the state Office of Cannabis Management enforcement powers. OCM can fine unlicensed operators up to $20,000 per day and seek court orders to close stores.

“I don’t want to pretend we’re going to wipe away the illicit market overnight,” Wright said. “This is going to be a process.”

Licensed retailers say something must be done if cannabis sales are going to produce the sort of tax revenue anticipated by the state.

“The unlicensed shops are undermining everything,” an industry executive told Crain’s at the industry conference.

“We know this isn’t what we signed up for,” said Dasheeda Dawson, founding director of Cannabis NYC, a division of the city’s Department of Small Business Services whose mission is to help licensed shops flourish.

More licensed dispensaries could help solve the problem.

After all, bootleg liquor is seldom sold in stores because licensed dealers have the clout to force state regulators to stop that activity, observed Artie Minson, chief executive of LeafLink, a Financial District-based firm that connects cannabis distributors with licensed retailers.

“Right now you have fewer than a dozen licensed shops trying to take on 1,500 unlicensed ones,” Minson said. (Full Story)

In categories:Business Dispensaries
Next Post

Trulieve to “Wind Down” Operations in Massachusetts

Multistate cannabis operator Trulieve Cannabis Corp. on Thursday announced plans to “wind down” its operations in Massachusetts. The company said the move is part of its broader plan to “preserve cash and improve financial performance.”  Since mid-2022, Trulieve has also…
Previous Post

Cannabis MSOs set to enter NY adult-use market after policy change

New legislation and major policy shifts have been proposed to stabilize the shaky rollout of New York’s adult-use marijuana program, including allowing some of the nation’s largest multistate operators (MSOs) to enter the expanded market by year’s end. Regulators at…
Random Post

New York Cannabis Office Releases Fact Sheet To Battle Misinformation About Weed, Fentanyl

The New York Office of Cannabis Management (OCM) published a two-page report entitled “Cannabis and Fentanyl: Facts and Unknowns” to demystify the facts and myths of the two substances, specifically that of fentanyl contaminating cannabis. “The goal of this fact…
Random Post

Hemp given special status, added to USDA advisory committee

The U.S. Department of Agriculture will include hemp in the title of one of its Agricultural Technical Advisory Committees (ATACs), showing the agency recognizes the crop’s importance as a commodity. Tobacco, Cotton, Peanuts and Hemp is the new name of the ATAC,…
Random Post

Louisiana Legislative Committee Unanimously Passes Adult-Use Cannabis Framework Bill

The Louisiana House Health and Welfare Committee recently passed House Bill 707 in a unanimous vote to propose a regulatory framework for the state’s cannabis legalization. The measure, which prefiled in March, doesn’t directly legalize adult-use cannabis but it does start the…
Random Post

Snoop Dogg's 'Giving Up Smoke' Stunt Promotes Smokefree Firepit

Snoop Dogg's "giving up smoke" post on November 16 was just a ruse to promote the smokeless firepit, Solo Stove. In another social media post this morning, the rapper explained: "I have an announcement: I'm giving up smoke. I know what…