With legal recreational cannabis sales in New York still months away, state regulators are cracking down on unlicensed companies that have taken the plunge and are already selling weed. Last week, officials from the New York Office of Cannabis Management (OCM) publicly identified 52 companies that received cease-and-desist orders directing stores to stop all illicit cannabis sales.
“You are hereby ordered to immediately cease all illegal activity,” read the cease and desist letters cited by The Gothamist. “Failure to cease this activity puts your ability to obtain a license in the legal cannabis market at substantial risk.”
The CMO added that the retailers identified were falsely portraying their businesses as licensed cannabis dispensaries. CMO President Tremaine Wright said in a press release that unlicensed sales, including through companies that provide seemingly free marijuana products with the purchase of other merchandise, are illegal and present a community health risk.
“No business is currently licensed to sell adult-use cannabis in New York State. Selling any item or making a donation and then offering a customer a bag of untested cannabis does indeed count as a sale under New York’s cannabis law,” Wright said in an agency statement. “You need a license to sell cannabis in New York. Licensed sales and a regulated market are the only way for New York customers to be assured that the cannabis products they buy have been tested and tracked from seed to sale Selling untested products puts lives at risk.
Companies face permanent ban from legal weed industry
The cease-and-desist letters sent by the CMO note that continued illicit marijuana sales by the identified retailers will render the businesses ineligible to receive a cannabis business license from the agency in the future. If commercial storefronts named by the agency do not cease operations immediately, they will be referred to the Cannabis Board of Control “for permanent prohibition from receiving cannabis licenses in New York State,” the agency said. agency.
“These stores pretend to be licensed and regulated businesses, but they are not. They don’t create opportunity, they create confusion – New Yorkers think they’re buying a tested, high-quality product when they’re not,” said Chris Alexander, executive director of the Office of Cannabis Management. “Not only are these stores operating in violation of New York’s cannabis law, they are also in violation of state tax and several municipal laws. I look forward to working with other regulatory agencies across the state. to hold these stores accountable for their flagrant violations of the law.
The identified companies initially received cease-and-desist orders in February advising them that their operations were illegal under the Marijuana Regulation and Taxation Act (MRTA), which was passed by New York lawmakers last week. last year. The CMO announced the regulatory action at the time, but declined to publicly identify the affected retailers. But under pressure from local media, the OCM made available the list of storefronts that had been notified by the agency last week.
“We have an obligation to protect New Yorkers from known risks and strengthen the foundations of the legal and regulated market we are building. We will achieve the goals of the MRTA to build an inclusive, fair and safe industry,” Wright said in February. “Therefore, these violators must cease their activity immediately, or face the consequences.”
More retailers under investigation
The CMO also noted last week that it had received information from law enforcement and the general public about other retailers who may be selling cannabis in violation of the law and will consider the advice for possible action. additional regulations. The agency added that until adult-use sales begin at licensed retailers, which is expected to happen later this year, the only legal way to source safe, lab-tested cannabis is through the regulated program. of state medical marijuana.
“New York is building the fairest cannabis industry in the nation, an industry that prioritizes the communities most affected by cannabis prohibition. Stores selling unregulated, unlicensed cannabis products have undermined these efforts. Plain and simple,” said Damian Fagon, chief equity officer of OCM. “Illicit stores don’t contribute to our communities, they don’t support our public schools, and they don’t protect consumers. why we work with partners across [the] government to investigate these operations and hold them accountable.
One of the operations identified last week by the CMO is the Empire Cannabis Club, which has two locations in Manhattan. At Empire, customers purchase a daily or monthly club membership and receive cannabis as a free gift. Steve Zissou, an attorney representing Empire, said the company is confident its operation is legal under the MRTA, which defines what constitutes a “sale” of cannabis and specifically allows the transfer of up to three ounces of cannabis. without compensation”.
“Empire’s business model is based on that,” Zissou said. “This is a non-charitable, non-profit cannabis dispensary that receives no compensation for transferring cannabis.”
The lawyer added that Empire is ready to defend its position in court if necessary.
“There’s an old adage: if you want peace, prepare for war,” Zissou said. “And so the Empire wants peace, but they’re ready for war if and when it comes.”