A confusing mixture of cannabis enforcement laws in New York

This post was originally published on this site.

Join NY Cannabis Insider at our next industry networking event on Aug. 15 at Madame Mikette’s in NYC. Tickets will sell out.

This guest column is from Paula Collins, EA, Esq., a tax attorney dedicated to the cannabis industry and a co-founder of the NY Consortium of Cannabis Accountants. She can be contacted at paula@paulacollinslaw.com. The views and opinions expressed in this article are those of the author, and do not necessarily reflect the views or positions of NY Cannabis Insider.

Buried in the bowels of the agenda for the July 19, 2023, OCM meeting is Notice 2023-30 – a resolution around violations, hearings, and enforcement regulations.

There’s the “E” word again. “Emergency.” Or maybe “Enforcement.” I’ll call it “E-squared.” Seems like whenever OCM talks about “enforcement,” they have to mention “emergency.”

But on July 19, amidst the other multi-episode, made-for-television dramas playing out in the room – the revised hemp regulations, farmers’ markets, the announcement of the additional CAURD licensees, and an interesting range of public comments, we really did not want to have a bona fide discussion about the unlicensed shops, or the hundreds of millions in tax money we are leaving untapped in these unlicensed pot shops, did we? Nah.

According to the announcement, last week’s resolution is warranted by the fact that combining the various rules will create a “substantially different regulation for violations, hearings and enforcement.” My hope is that we can get a single document, or else group the enforcement measures into a unified chunk of the regulations, that can be read without multiple cross references, bracketed portions and parentheses.

Honestly, it’s tough to keep it all clear. There was the basic language of the MRTA, followed by Resolution No. 2022-49 in November 2022, then another set in Resolution 2023-13 filed in April 2023, and then of course the amendment to the MRTA with regard to enforcement that was slipped into Part UU of Chapter 56 on May 3, 2023. Part UU has references back to the MRTA by section number. The rules and regs are meant to fill in where the law might be more broad based. But trying to find the relevant rule, regulation, or law is a lot like going Pokemon hunting: ya gotta catch ‘em all to gain a thorough understanding.

The glaring issue is that Section 16-a in the cannabis law, which was added with approval from both houses of the New York legislature and a signature from the governor, outlines a different sequence of steps for carrying out enforcement than what is contained in Section 133.23 of the proposed regulations.

Who resolves these differences? A judge? The CCB? An OCM hearing officer?

What prevails? The law or the OCM regulations?

Only time, and possibly litigation, will tell.

We heard from Gov. Kathy Hochul that there were enforcement actions in June. I am aware of other enforcement actions that have happened, some by local law enforcement, some by the Criminal Division of the Department of Taxation and Finance (DTF) (that’s a thing, ya know).

The Tax Police – that’s how they identify themselves when they storm in with badges, bullet proof vests and weapons – have up until now functioned largely in the realm of cigarette tax enforcement. New York takes its cigarette taxes seriously. Remember: members of New York’s finest killed Eric Garner over unlicensed cigarettes. I sincerely hope we will not have similar acts of violence under the guise of marijuana enforcement.

I also hope that inspectors have a deep understanding of constitutional rights in the manner in which the inspections are carried out. It would be a tragedy to seek short-sighted gains in the regulated market by repeating the long-standing tragedy of violations of individual rights. That would be like advancing the interests of the CAURD licensees, who famously had their rights violated in the War on Drugs and Stop and Frisk era, by repeating the same violations against a new group of defendants: the employees and owners of the unlicensed smoke shops. Like ‘em or not, the unlicensed shop owners do have constitutional rights.

I truly hope that our regulated cannabis market will go through a growth spurt, as is typical in the terrible twos (it’s now been two years and four months since the MRTA was signed). I still have a vision for a transitional license that would allow many of the unlicensed shop owners to step into the regulated market and pay their taxes. I’m not talking about a cheap license, either. Let ‘em in and make ‘em pay!

We have tremendous momentum in NY cannabis after last week’s celebrations. There’s nothing that is wrong in New York cannabis (the people, the products, the laws) that can’t be fixed by what’s right in New York cannabis (the people, the products, the laws). Here’s to good mojo in the weeks ahead.