New York Regulators Send Cease and Desist Letters to 52 Unlicensed Cannabis Retailers

New York’s Office of Cannabis Management (OCM) is once again warning businesses to stop selling or gifting cannabis without a license.

Regulators issued their first batch of cease and desist letters in February to businesses suspected of illegally selling or gifting cannabis, and sent an additional 52 letters July 7, according to an OCM press release.

“These stores falsely depict their operations as legal cannabis dispensaries, but they are not licensed by New York State and are selling untested products that put public health at risk,” OCM officials stated in the release.

The letters notify the operators that failure to cease operations could permanently disqualify them from receiving a cannabis license in the state.

“There are no businesses currently licensed to sell adult-use cannabis in New York State,” Tremaine Wright, Chair of New York’s Cannabis Control Board (CCB), said in a public statement. “Selling any item or taking a donation, and then ‘gifting’ a customer a bag of untested cannabis does indeed count as a sale under New York’s cannabis law. You need a license to sell cannabis in New York. Licensed sales and a regulated market are the only way New York’s customers will be assured that the cannabis products they are purchasing have been tested and tracked from seed to sale. Sale of untested products put lives at risk. I implore these illegal store operators, and any other stores pretending to be legal operations, to stop selling cannabis products immediately.”

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Local law enforcement and the public have brought additional unlicensed cannabis storefronts to the OCM’s attention, according to the release, and those retailers are currently under regulators’ review.

“These stores are masquerading as licensed, regulated businesses, but they are nothing of the sort,” Chris Alexander, Executive Director of the Office of Cannabis Management, said in a public statement. “They aren’t creating opportunity, they are creating confusion—New Yorkers think they’re buying a high-quality, tested product when they aren’t. Not only are these stores operating in violation of New York’s cannabis law, but they also are breaking state tax and several municipal laws. I look forward to working with other regulatory bodies across the state to hold these stores accountable for their flagrant violations of the law.”

RELATED: Empire Cannabis Club Ignores State Regulator’s Cease, Desist Order

Former New York Gov. Andrew Cuomo signed the Marijuana Regulation and Taxation Act (MRTA) into law in March 2021 to legalize adult-use cannabis in the state.

Current Gov. Kathy Hochul’s nominations of Alexander as OCM Executive Director and Wright as CCB Chair launched the state’s regulatory authority in September 2021.

Hochul revealed in January during her State of the State address that officials would create a $200-million fund to support social equity cannabis businesses in New York, and officials warn that unlicensed cannabis retailers could adversely affect these efforts.

RELATED: New York Governor Announces ‘Seeding Opportunity Initiative’ to Promote Social Equity in State’s Adult-Use Cannabis Market

“New York is building the most equitable cannabis industry in the nation, one that prioritizes those communities most harmed under cannabis prohibition,” said Damian Fagon, Chief Equity Officer at the Office of Cannabis Management, in a public statement. “Stores selling unregulated cannabis products without licenses undercut those efforts, plain and simple. Illicit stores don’t contribute to our communities, they don’t support our public schools and they don’t protect consumers. That’s why we’re working with partners across government to investigate these operations and hold them accountable.”

New York’s social equity plans took additional steps forward last month when Hochul announced appointments to the state’s Cannabis Advisory Board, which is tasked with establishing an equitable and inclusive industry, as well as an investment team to manage the $200-million Social Equity Cannabis Investment Program.

In addition, New York officials have revealed that they will issue the first adult-use dispensary licenses to applicants with past cannabis-related convictions, although no retail licenses have been awarded to date.

RELATED: How to Win a Cannabis License in New York: 4 Tips for Success

The CCB has started issuing conditional adult-use cultivation licenses, however.

Hochul signed legislation into law in February to allow New York’s hemp farmers to apply for Conditional Adult-Use Cannabis Cultivator licenses to grow cannabis during the 2022 growing season to supply the adult-use market.

RELATED: Inside New York’s Legislation to Allow Hemp Farmers to Grow Cannabis for the State’s Adult-Use Market

The CCB opened the application process for adult-use cannabis processors June 28; that application window remains open until Aug. 31.

As the links in the supply chain continue to click into place, commercial adult-use sales are expected to launch at licensed retailers this fall.