Few NY enforcement actions for illicit marijuana sales resolved, regulator says

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The vast majority of crackdown efforts by New York regulators and law enforcement agencies related to illegal marijuana sales have failed to be resolved, officials confirmed Monday.

One potential reason: New York regulators have halted administrative hearings where judges can levy fines and other penalties against those selling illicit marijuana products.

The shift by the state’s Office of Cannabis Management (OCM) effectively eliminates one path to punishment after raids on unlicensed smoke shops and retail outlets, though such incursions continue to be initiated, according to The City news website.

The OCM attributed the change to a lack of resources, and the agency did not indicate when it planned to restart the administrative trials, The City reported.

Of the 300 or so actions that regulators and law enforcement have taken across the state since June, only 16 have reached some resolution, OCM Executive Director Chris Alexander said Monday in Albany during a public hearing about the state’s floundering cannabis market.

That’s roughly 6% of all cases.

Under newly adopted laws in New York, the state can impose a $10,000 penalty for each day of illegal cannabis sales and a $20,000-per-day fine on those selling cannabis after receiving an OCM order to cease operations.

It appears those penalties and other enforcement actions have done little to slow illegal marijuana sales.

That’s particularly the case in New York City, where officials estimate 1,000s of unlicensed stores are still operating today.

“This is a big threat to public health,” Alexander told the state Senate on Monday.

“We have to open more legal (stores) and close more illegal ones.”

Unregulated products from other states have been flooding the New York market, according to OCM Director of Investigations/Enforcement Daniel Haughney.

“We’re seeing products from out of state,” he said during the hearing.

“It’s not New York licensed locations supplying these stores.”

New York launched legal adult-use sales on Dec. 29, 2022.

Only 26 licensed adult-use retailers are operational today in the entire state, well below market expectations set by Gov. Kathy Hochul and regulators who projected opening 20 stores per month after launching recreational sales.

The OCM is moving to issue more marijuana business licenses as legal producers face a buildup of unsold inventory in the face of limited legal retail outlets.

The agency declined to comment to MJBizDaily on Monday.

Instead, a spokesperson told MJBizDaily to watch the Senate hearing and reference Alexander’s comments on subject matters.

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.