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The Office of Cannabis Management held its first enforcement hearing on Wednesday as part of New York State’s recent crackdown on illicit shops.
NY Cannabis Insider watched the proceeding to see how the state intends to prosecute these cases, and how businesses may end up defending themselves against the charges.
Last week’s preliminary hearing involved Manhattan-based Roll Up Nation – one of the 31 businesses inspected and issued a notice of violation during the week of June 5, when the OCM and the Department of Taxation and Finance conducted a first sweep of New York’s unlicensed market.
The raids came one month after Gov. Kathy Hochul signed legislation affording OCM and DTF new powers to go after these businesses. The early-June enforcement resulted in nearly $11 million – or at least 1000 pounds – of illicit products seized overall, according to a recent press release from the governor.
Roll Up Nation’s manager, Veronica Guerrero, and building owner, Omar Eid, were at the hearing on Wednesday flanking their attorney, Paula Collins. (Disclosure: Collins is a frequent guest columnist for NY Cannabis Insider).
OCM Deputy General Counsel Christopher DeLuca introduced evidence and Administrative Law Judge Thomas Kidera presided over the hearing.
Both sides had a chance to present photos and evidence and ask questions of witnesses, including OCM Senior Inspector Wilhemina Boxhoorn, who supervised the raid on Roll Up Nation.
Roll Up Nation (or Roll 2 Nation?)
“What are some characteristics you look for to see if a product is a cannabis product?” DeLuca asked Boxhoorn.
“Starting with cannabis flower, it does have a very strong odor,” said Boxhoorn. “Leafy-green material. Leaves. Usually comes in bud form. Most of the time we see it, it is either prepackaged or loose-packaged in any of the retail locations.”
Roll Up Nation brands itself as a social club where members donate – and are gifted – cannabis as part of a membership fee. Guerrero, the club’s manager, said under oath on Wednesday that the business’ main purpose is to serve as a gathering place for the community.
“Cannabis is the last thing on our mind,” she said, “because we don’t sell cannabis.”
The club, located at 738 Broadway, has little-to-no outdoor signage, according to photos submitted as evidence. It does not market to children, Guerrero said, or have much of a social media presence. However, the club is on the same block as Housing Works Cannabis Co., the first licensed dispensary in the state.
“You don’t have a permit from OCM … you don’t have a registration from OCM, right?” asked DeLuca.
“No, not to sell,” Guerrero said.
DeLuca showed photos of cannabis seized during the raid, which included flower and edibles kept behind the counter. There was also a point-of-sale system, though Guerrero said it was used for the store’s merchandise, such as hats and T-shirts.
After the OCM presented its case, Collins zeroed in on the office’s sloppy paperwork.
The OCM’s Notice of Violation correctly named the club but listed the wrong address: instead of 738 Broadway, it said 783 Broadway.
The agency’s inspection report had the correct address but the wrong name, confusing Roll Up Nation with Roll 2 Nation.
In fact, both OCM and Hochul identified Roll 2 Nation as the business at 738 Broadway in press releases following the raids.
“I question whether OCM even knew where they were,” Collins said while cross-examining Boxhoorn.
Collins also tried hammering the agency on a Fourth Amendment violation, after Boxhoorn allegedly searched Guerrero’s personal bag during the inspection without reading a Miranda warning.
Boxhoorn denied searching Guerrero’s bag, but its contents were listed among the items seized in an OCM form.
DeLuca objected to the Fourth Amendment issue and the judge sustained the objection.
“I appreciate the point that you’re making,” Kidera said to Collins, “but in terms of the relevancy of the issue of what was being sold or not being sold at the particular premises, Fourth Amendment issues of her own personal search is a separate issue for you to pursue, but for purposes of this hearing, it’s pretty not relevant.”
Lastly, Collins said Roll Up Nation isn’t much different from other event spaces where OCM officials have visited and mingled with operators.
She asked the judge to decide against fines for Roll Up Nation, and for OCM to tighten up its procedures going forward – considering, she said, there are another roughly 36,000 similar businesses for the agency to enforce against.
“I would respectfully ask, in the spirit of getting these 36,000 shops set on the right path with this, our first hearing, that we take note of these improprieties in this whole process: make sure that we get the name and the address of the business right, for starters; make sure that we get the law correct, for starters; and the whole procedures that happen on the scene correct as we embark on this era in New York cannabis history.”
Now, OCM and Collins have several weeks to submit written summaries to the law judge, who then has 30 days to issue his determination and possible fines. Each side has 30 days to appeal the judge’s findings, then the final determination is submitted to the Cannabis Control Board for approval or rejection.