Hochul Says New York Illicit Cannabis Market 'Unacceptable'

As the unlicensed cannabis market in New York continues to flourish, Gov. Kathy Hochul has proposed legislation that would place more robust restrictions on unregulated storefronts.

In February, the New York City Police Department estimated 1,300 unlicensed cannabis establishments were in New York City alone. With only five licensed adult-use cannabis retailers in the state nearly three months after commercial sales began, the illicit market heavily outweighs the legal market and poses a challenge to law enforcement.

In Hochul's statement released March 22, she calls the existence of unlicensed cannabis establishments in the state "unacceptable," and that additional enforcement is needed to protect New Yorkers from unlicensed products and to support the state's social equity initiatives.

Hochul’s legislation, which is being introduced as a governor’s program bill in the Senate and Assembly, would amend the state’s tax and cannabis laws to allow the Office of Cannabis Management (OCM), the Department of Taxation and Finance and local law enforcement to crack down on illicit cannabis retailers.

The measure would place new penalties on retailers who avoid state cannabis taxes and stiffen and restructure the current penalties against unlicensed shops. Individuals who violate the law could face fines of $200,000 for selling illicit cannabis plants or products, and the OCM would be permitted to fine businesses that are engaging in illegal cannabis sales $10,000 per day, according to the press release.

Moreover, it would expand the OCM's authority to "seize illicit products, establish summary procedures for OCM and other governmental entities to shut down unlicensed businesses, and create a framework for more effective cross-agency enforcement effort," according to the release.

The New York Medical Cannabis Industry Association (NYMCIA) also chimed in on Hochul's announcement, suggesting that the illicit market is impacting the integrity of the medical cannabis program.

"As the state moves to establish a robust, well-regulated, and safe adult-use program, it is equally critical that the existing medical program is supported. Indeed, the program suffers in large part due to competition from the proliferation of illegal pop-up shops," NYMCIA said in a statement.

Chris Alexander, OCM executive director, said that for New York's equity-based approach to the industry to succeed, enforcement of cannabis laws is critical.

"Entrepreneurs looking to participate in our legal cannabis industry, especially justice-involved individuals looking for a CAURD (Conditional Adult-Use Retail Dispensary) license, are being economically harmed by bad actors filling their storefronts with products that are questionable, unregulated and potentially dangerous," he said. "The Office of Cannabis Management is fully committed to working with our partners across the state to permanently shut these operations down and allow legal, licensed businesses to grow and thrive."