Governor Kathy Hochul today announced enforcement teams from New York State’s Office of Cannabis Management and Department of Taxation and Finance conducted inspections at storefront businesses not licensed to sell cannabis in Ithaca and Binghamton. These actions led to Notices of Violation and Orders to Cease Unlicensed Activity being issued, building on actions taken in New York City last week, and they will continue to be replicated across the state to end public sales of illicit cannabis by any unlicensed businesses. State enforcement actions were made possible as part of the FY 2024 Budget Governor Hochul signed into law last month.
“As the most equitable cannabis industry in the nation gains momentum, we continue to take action against bad actors who seek to skirt around our laws,” Governor Hochul said. “Unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market, and we will continue to take these critical enforcement measures to protect New Yorkers from illicit, unregulated sales.”
On May 3, 2023, Governor Hochul signed legislation enabling for the enhanced, statewide enforcement by OCM on unlicensed cannabis businesses as part of the FY 2024 Budget. The legislation now enables OCM to also assess civil penalties against unlicensed cannabis businesses, with fines of up to $20,000 a day for the most egregious conduct, and starts the process of potential closure of a retail location selling cannabis without a license among other penalties. The new law also makes it a crime to sell cannabis and cannabis products without a license.
As a result of the legislation, the Department of Taxation and Finance can now conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid and to levy civil penalties in cases where they have not. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxes or knowingly possess for sale any cannabis on which tax was required to be paid but was not.
By taking decisive action against unlicensed cannabis businesses, New York State is making a significant stride toward cracking down on unlawful cannabis operations that jeopardize public safety, consumer well-being, and the integrity of New York State’s legal cannabis market.
On Tuesday, OCM and DTF conducted inspections on three businesses in Ithaca. Each of the locations was issued a notice of violation for selling cannabis without a license. The penalty for this, which will ultimately confirmed through an administrative hearing process, is $10,000 per day, plus potential additional penalties. The inspected businesses may also be subject to additional violations and penalties under the Department of Tax and Finance Law.
The following shops were inspected in Ithaca:
- Black Leaf — 103 East State Street, Ithaca, NY
- Zaza Convenience — 101 East State Street, Ithaca, NY
- The Rezz — 312 Fourth St, Ithaca, NY
Yesterday, OCM and DTF conducted inspections in Binghamton. As in Ithaca, both locations were issued a notice of violation for selling cannabis without a license with. The penalty for this, which will ultimately confirmed through an administrative hearing process, is $10,000 per day, plus potential additional penalties. The inspected businesses may also be subject to additional violations and penalties under the Department of Tax and Finance Law.
The following shops were inspected in Binghamton:
- Green Magic – 144 Henry St
- Takeoff 2 – 63 Chenango St
State Senator Lea Webb said, “We do not allow bars and restaurants to operate here in New York without proper licensing and the same is true for cannabis shops. My Senate district is home to two of the first adult-use dispensaries to open their doors in Upstate New York, one in the City of Binghamton and the second in the City of Ithaca. These business owners have worked hard to obtain legal licenses to sell cannabis, create new jobs in our community, and support our local economy. I appreciate my colleagues and Governor Hochul’s commitment to protecting our state’s investment in our cannabis industry, which not only helps grow our local economy, but also supports New York’s agricultural producers and folks who have been disproportionately harmed by the criminalization of cannabis.”
Assemblymember Anna Kelles said, “I strongly believe in the legislation that passed to legalize the use, possession, and sale of cannabis in NY. One of the most important aspects was to make amends for a long history of criminalization and incarceration with a disproportionate impact on low income black and brown communities. The State is working to rectify this wrong through the legal licensing process that is underway for the sale of cannabis. The illegal sale of cannabis is directly undermining this important effort.”
Assemblymember Donna Lupardo said, “I’d like to thank Governor Hochul, the Office of Cannabis Management and the Department of Taxation and Finance for this critically important enforcement activity. In order for legal, adult-use cannabis businesses like Just Breathe to survive, we have to remove unlicensed and unfair competition. The viability of this new industry hinges on the success of every aspect of the supply chain, including our farmers, processors and retailers. As we strive to create a fair and equitable market, these seizures will give this industry some needed stability.”
City of Binghamton Mayor Jared M. Kraham said, “The City of Binghamton is proud to lead the way in Upstate New York as home to the first legal cannabis dispensary outside New York City. We’re grateful to Governor Hochul, the Office of Cannabis Management and the Department of Taxation and Finance for their recent efforts to crack down on unlicensed shops illegally selling cannabis in our community. The City of Binghamton will continue to work side by side with the State on this type of enforcement, which is necessary to protect the consumer and ensure the regulated cannabis industry thrives.”
City of Ithaca Mayor Laura Lewis said, “The City of Ithaca is grateful to New York State, Governor Hochul and the Office of Cannabis Management for its recent robust enforcement actions against unlicensed cannabis dispensaries in the City of Ithaca. Ithaca is proud to play a role in the regulated cannabis industry, with its focus on equitable economic development, safety, and community benefit. Unlicensed, illegal sales of cannabis undermine this initiative. We stand with the State in its efforts to ensure a flourishing licensed cannabis industry by cracking down on this illegal activity in Ithaca.”
Shawna Black, Tompkins County Legislative Chair, said, “Tompkins County is thankful that New York State has taken the proper steps to legalize and distribute cannabis safely. There have been guidelines and regulations set in place for cultivating, delivery and dispensing cannabis products. Historically, those that have been most impacted through incarceration by the sale of marijuana have been black and brown people of color. We now have a system in place which vets dispensaries, creates safer packaging (not targeted towards children), and clearly identifies the amount of THC a product has. When there are regulations around cultivating and dispensing – we are all safer. Thank you to Governor Hochul, the Office of Cannabis Management and Department of Taxation and Finance for inspecting illegal operations in Ithaca that show disregard to the New York State licensing process.”
Shops that were issued notices will next be subject to hearings before an Administrative Law Judge (ALJ). If found to be non-compliant, an ALJ may confirm the fines assessed and require unlicensed operators to pay them.
OCM and the DTF will be following up on locations inspected to ensure unlicensed activity has ceased. If continued unlicensed activity is found to persist, OCM can petition the State Supreme Court to order the retail space padlocked shut until the location complies with the cannabis law and regulated regulations.
Additional information on fines:
If an unlicensed location is found to continue selling cannabis products after OCM issues a Notice of Violation/Order to Cease, an additional per-day penalty of up to $20,000 may be assessed by an ALJ. Further, should the unlicensed business remove the OCM Notice of Violation or Warning affixed to the business storefront, the business is subject to a fine of up to $5,000.
Additional information regarding previous and ongoing operations in New York City:
OCM and DTF began their first joint inspections authorized by the new enforcement law the week of June 5, 2023, in New York City, where inspections will remain active and ongoing. The two agencies inspected 11 shops in Manhattan last week, have inspected several more this week, and will continue to do so.
All of the shops inspected in New York City last week were selling cannabis without a license and, upon inspection, were issued Notices of Violation and Orders to Cease Unlicensed Activity.
The following shops were inspected last week:
- Varieties on Broadway – 736 Broadway
- Roll 2 Nation – 738 Broadway
- Baby Jeeter – 793 Broadway
- Maze – 16 St. Marks Place
- LaGuardia Smoke – 510 LaGuardia Place
- Nomad – 59 West 30th Street
- Play lane – 117B W 23rd Street
- Cannabis Culture – 403 8th Avenue
- Smoke Factory – 287 7th Avenue
- Go Green Dispensary – 603 6th Avenue
- Daydream – 1181 Broadway
Sean Hocking
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