NYC’s illegal cannabis dispensaries are on the verge of a bloodbath

Police in New York City will launch a full crackdown on unlicensed weed shops, and state legislatures will propose legislation further empowering law enforcement to crack down on the illegal businesses, officials said yesterday during a NYC Council hearing.

The Council’s Consumer and Worker Protection Committee held a hearing Wednesday during which its members spoke with the city’s Sheriff’s Office, the NYPD, the Department of Health and Human Services and other local agencies about an increase in unlicensed smoking shops selling weed in NYC .

“The taskforce is moving on, our operations are increasing, we’re doubling – if not tripling – the enforcement we have,” NYC Sheriff Anthony Miranda said. “We want them to know what kind of enforcement is happening so they understand we’re not going away.”

While the state’s most populous city has long had an illustrious underground weed market, its storefronts selling untested cannabis (in addition to untaxed cigarettes and illegal flavored e-cigarettes) have grown exponentially since the state legalized adult recreational use in 2021, and since then only one legal shop has opened.

Mayor Eric Adams launched an interagency task force in December as a pilot program to tackle the surge in illegal smoking shops. The task force includes the Sheriff’s Office, NYPD, Department of Consumer and Labor Protection, and Office of Cannabis Management.

The group identified at least 1,200 illegal weed stores, Miranda said, and seized about $6 million worth of illegal products, including 600 pounds of weed, resulting in civil and criminal reprimands.

Taskforce members identify potentially illegal deals through complaints from OCM, government officials and other sources.

Councilor Gale Brewer, chairman of the Oversight and Investigations Committee, said the illegal trades are causing a lot of problems. She said products from these stores often contain dangerous contaminants, and the illegal stores, which operate openly and without consequences, threaten the survival of legal operators, who face heavy taxes and compliance fees, she said. Brewer said there are 11 illegal cannabis retailers operating within a 10-block radius of the state’s only legal adult-use dispensary, which is operated by nonprofit Housing Works.

“The tidal wave of unlicensed sellers in the state’s largest market threatens, I fear, to undermine the commendable effort,” Brewer said. “These illicit businesses appear to be sucking up revenue that should go to licensed pharmacies that are still unable to open due to government delays.”

In addition, criminals benefit from the proliferation of illegal tobacco shops, task force members found. The data shows 593 robberies of smoking shops in 2022, up 137% from 250 the year before.

Miranda and other taskforce members told councilors there was little they could do to immediately close stores selling untested weed. They can seize illegal cannabis, report violations to licensing authorities, and institute harassment proceedings against the store, but the process can take up to two years.

During a public comment session, Senator Liz Krueger — lead MRTA sponsor in the Senate — said she understands the frustration at the illegal deals. Krueger introduced a bill last year that would have expanded OCM’s powers to seize illegal marijuana and allowed the state Departments of Taxation and Treasury to penalize people who illegally sell weed. It would also have doubled the civil penalties for “any person knowingly possessing ‘illegal cannabis'”.

Krueger acknowledged that the state has been slow in creating and implementing policies to introduce the legal cannabis market in New York, but said the state legislature will begin enforcing weed in the 2023 session.

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“We will introduce new, expanded legislation that will give the state and our police departments, our sheriffs and our marshals more tools,” Krueger said. These stores “damage the entire model that we’ve been trying to build and establish across the state.”

During a public statement, many people expressed concern about illegal businesses popping up near schools and selling to underage children. However, two representatives from the Yemeni American Merchants Association said many bodega owners – many of whom are new to the country – do not understand what is legal and what is not when it comes to cannabis and need more education.

Paula Collins, an attorney and accountant whose clients include smoke shop owners, suggested that the state might consider creating an interim license for shops that currently legally sell weed but wish to legally sell tested weed. This could bring the city about $60 million in sales taxes a year, Collins estimated.

“The city is broke, can we really afford to turn down this money without really trying to see if we can reclaim it?” asked Collins.