New York’s fiscal budget vastly expands unlicensed marijuana store crackdown

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

The newly approved annual state budget in New York greatly expands enforcement actions and resources to curb the proliferation of unlicensed marijuana operators.

Gov. Kathy Hochul, who a few months ago called the state’s rollout of recreational cannabis retail a “disaster,” announced a series of measures that provides the Office of Cannabis Management (OCM) and local municipalities with new authorities against illicit storefronts and enablers, including:

  • Padlocking businesses immediately after an inspection if they are selling illicit cannabis and pose an imminent threat to health and safety.
  • Fining landlords who fail to initiate eviction proceedings against unlicensed storefronts $50,000 within New York City or five times the rent outside the city.
  • Allowing municipalities to enact laws and emergency actions regulating unlicensed cannabis businesses.

Enforcement options abound

The state’s fiscal 2025 budget also establishes a misdemeanor penalty for damaging or removing a padlock.

In New York City, an administrative hearing will be held within five days of initiating an emergency padlock order, with a decision issued within four days after the hearing.

If imminent harm is not an issue, the OCM will issue a violation notice and cease-activity order.

The stores will be padlocked after reinspection if unlicensed sales activity continues.

If the store is licensed to sell alcohol, lottery tickets or tobacco and vaping products, the OCM will send a notice to the relevant licensing agency and a warning the business could lose its license.

The OCM will hold hearings upon request within three days and render a decision within four days after a hearing.

The $237 billion budget also lowers the standard of proof to evict a tenant in violation of cannabis law. Landlords now need to prove only that a business is “customarily or habitually” engaged in selling marijuana without a license, not “solely or primarily” doing so.

Task force is planned

Hochul also plans to establish a statewide task force to handle civil enforcement to close illegal stores.

“Unlicensed dispensaries have littered New York neighborhoods, blatantly circumventing our laws and selling potentially dangerous products,” the governor said in a statement.

“Enough is enough. I promised to protect our communities and hard-working, legal cannabis licensees by expediting the closure of illicit storefronts.”

The state has at least 2,000 illicit operators, according to figures obtained by The New York Times.

Conversely there are only 114 adult-use licensed marijuana dispensaries and delivery providers in New York, according to the latest OCM figures.