Social Media Platforms ‘Fueling’ New York’s Unlicensed Cannabis Market, Stakeholders Say

Editor's note: New York Gov. Kathy Hochul held a press conference Feb. 28 to address the unlicensed cannabis shops as well as their social media advertising and map location listings on technology platforms. That story is here. 

As unlicensed cannabis stores continue to proliferate in New York, oversight matters have only appeared to compound for state regulators.

Numerous unlicensed cannabis businesses throughout the state are now actively listing themselves on various social media platforms and utilizing paid advertising space to promote their untested products and services, according to five industry groups.

Facilitating in this evasion of regulatory oversight, these digital channels are “fueling the flooding of our communities by unlicensed stores,” the groups wrote in a Feb. 26 letter to Gov. Kathy Hochul, asking that the state’s lead executive take legal action.

“These companies must be held accountable for their part in enabling illicit cannabis activity and failing to uphold the standards necessary to protect New York consumers and uphold the law,” they wrote. “The unchecked presence of unlicensed cannabis stores on popular social media platforms not only undermines the integrity of the regulated market but also poses serious risks to public health and safety.”

The letter (below) was penned from the following signees:

• Service Disabled Veterans in Cannabis Association
• NY Cannabis Retailers Association
• Long Island Cannabis Coalition
• Minorities for Medical Marijuana (M4MM)
• National Hispanic Cannabis Council Tristate Chapter
  

The letter comes more than a year after adult-use sales launched with just one social equity operator in December 2022.

State regulators in the New York Office of Cannabis Management (OCM) spent the majority of 2023 dedicated to rolling out an equity-focused retail program that went underfunded and was challenged in court. More recently, OCM approved the first 38 dispensary licenses Feb. 16 for a general application window that was open to all businesses.

Today, there are only 65 dispensaries and 12 delivery-only operators serving a state of roughly 19.5 million people, in turn allowing thousands of unlicensed stores to overtake New York City and elsewhere.

While OCM regulators approved a measure to increase enforcement against unlicensed operators in October, the state has since struggled to follow through on financial sanctions against these operators: Of the $25 million in fines levied since last year, OCM and the state’s tax department have only been able to collect $22,500 as of Feb. 22, according to THE CITY. 

These fines were added as an enforcement mechanism after OCM cited a lack of funding tied to the state’s raids on unlicensed shops.

Now, these unlicensed shops are increasingly expanding their presence on popular social media platforms and have utilized advertising channels on Google, according to the five groups that signed the Feb. 26 letter to Hochul.

“New York consumers trust the results of a Google search and are being mislead [sic] on a daily basis by social media companies’ search engines, mapping features and review listings that direct unknowing consumers to unlicensed and illegally operating cannabis stores in New York State,” they wrote. “The actions and practices of these social media companies fuel unlawful acts and practices causing adverse effects to consumers in every part of the state.”

As such, the groups are urging Hochul to take “immediate action” by engaging with state Attorney General Letitia James to initiate “a lawsuit that sends a strong message to these main social media platforms to require them to remove unlicensed cannabis stores within the confines of New York State from their platforms, restoring trust and accountability.”

The groups suggested implementing a process for social media platforms within New York to use the state’s OCM verification tool to ensure companies are licensed before they’re allowed to purchase advertising space.