NY Gov. Hochul Shuts Down Illicit Cannabis Shops, Pace Of New Stores Is ‘Frustrating’

June 24, 2023 · Investing.com

New York Gov. Kathy Hochul has taken decisive action against unlicensed cannabis shops, announcing the temporary closure of over two dozen businesses.

While acknowledging the sluggish pace of licensed dispensary openings, Gov. Hochul reassured the public that there are currently 15 licensed shops operating, with two more expected to open by September, per CBS News.

However, “I’m not satisfied with the pace,” Hochul said. “It is frustrating for those who have been anticipating the opportunity to open businesses, and we had to overcome a lot of hurdles and we’re making changes.”

The OCM Role: The Office of Cannabis Management (OCM) has played a crucial role in the crackdown on unlicensed shops, having confiscated over 1,000 pounds of illicit cannabis valued at up to $11 million since June.

Recent legislation empowers the OCM to impose fines of $10,000 per day on unlicensed shops, which can escalate to $20,000 per day for persistent violators, per NBC New York.

Moreover, licensed shops are required to display signs featuring QR codes to verify their licenses, and products sold in these shops must indicate the THC content and provide QR codes for lab results.

Revenue Shortfall, Prompts Calls For Regulatory Action Furthermore, to ensure proper tax compliance, the state Department of Taxation and Finance will conduct inspections. The state plans to invest $5 million in enforcement efforts and hire nearly 40 additional agents to oversee the cannabis market.

However, a report by the Coalition for Access to Regulated & Safe Cannabis (CARSC) highlights the failure of NY’s adult-use cannabis program to meet tax revenue targets. The report emphasizes the negative impact on equity participation and the deprivation of critical tax revenue for affected communities. CARSC urges immediate regulatory action to protect consumers and fulfill the goals of the Marijuana Regulation and Taxation Act (MRTA).

How About Farmers? The absence of licensed cannabis dispensaries in New York State presents significant challenges for farmers, as their marijuana crops remain unsold and at risk of waste. The limited number of dispensaries not only affects farmers but also impacts cannabis processors, making it difficult to get their products on shelves and significantly impacting their businesses.

The financial distress caused by the lack of cash flow has led some farmers to contemplate abandoning their licenses, preventing them from continuing production.

And Landlords? In response to the proliferation of illegal marijuana retailers, the New York City Council has passed a bill targeting landlords who rent to these unlicensed shops.

Under this new legislation sponsored by Queens Council member Lynn Schulman, landlords can receive a warning if city inspectors discover an unlicensed shop selling cannabis or other tobacco products. Subsequent inspections revealing ongoing illicit sales may result in fines of $5,000 for the first violation and $10,000 for subsequent violations. The bill passed with an overwhelming vote of 48-0, with only one abstention.

This initiative aligns with previous enforcement measures announced by Mayor Eric Adams and Manhattan District Attorney Alvin Bragg, further underscoring the determination to address the issue of unlicensed cannabis shops in the state, reported Crain’s New York Business.

Read More: State Senator Cooney Introduces Legislation To Address Urgent Issues In New York’s Embattled Cannabis Program (Full Story)

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