The War on Drugs is still raging in New York, only the target population has changed

This post was originally published on this site.

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.

While most of the NY cannabis community was out, literally or figuratively, in Kingston on Friday of last week, other significant action was taking place in the cannabis space concerning the unlicensed market.

Raids were executed at several shops in various parts of the state. More significantly, legal action was taken to curtail the warrantless searches by New York State conducted under the guise of cannabis enforcement.

Lest you think, “Doesn’t apply to me – I just gotta get this #@%!-ing injunction lifted so I can open my licensed shop,” or else, “Doesn’t apply to me – I just gotta wait until OCM drops the applications in October” – hold on.

The way the enforcement bill that was signed on May 3, 2023, reads, they can send the stormtroopers to your licensed shop, too. In other words, 10-20 officers in SWAT regalia can roll up, crash your door, and toss your product – and they don’t even need probable cause or a warrant. They don’t even have to give their names and badge numbers.

From Part UU: “§10. Subdivisions 3 and 5 of section 11 of the cannabis law are amended and three more subdivisions 13, 14, and 15 are added to read as follows…5. To [inspect or provide for the inspection] conduct regulatory inspections during normal business hours of any registered, licensed, or permitted [premises] place of business, including a vehicle used for such business, where medical cannabis, adult-use [or] cannabis, cannabinoid hemp [is], hemp extract products, or any products marketed or labeled as such, are cultivated, processed, stored, distributed or sold.”

“Say whuuuuuuuut?”

Yes – a significant portion of the enforcement bill applies to licensed shops. They can “inspect” you, too.

You’re thinking, “Well, of course, counselor, that’s the whole point of a regulated industry. Inspections happen!”

True. But the way the inspections happen matters.

If we don’t take notice of what’s going on with the inspections of the unlicensed shops, the door may be open for the same actions being exacted upon the licensed shops. And that, too, matters.

Even if you have faithfully followed the letter of the law, and held on until the point that you have depleted all of your personal savings and assets, you could find yourself in the crosshairs of a DTF/OCM target list.

That comment you made to a regulator; that social media post you made, complaining about seed-to-sale tracking; an anonymous tip called in by a pissed-off consumer; an envious competitor – any or all of these could result in a so-called “inspection.” Suddenly, the tables are turned, and you and your employees are the ones reviewing security camera footage after spending several hours in detention; your beautiful shop turned upside down by the Tax Police who won’t show you a warrant, won’t tell you how or why your shop is on their hit list that day, won’t let you invoke your rights under the amended cannabis law to refuse the inspection, won’t stop as they search your personal bag or purse, and won’t give you their names and badge numbers as they cart off your inventory in garbage bags.

Oh – did I call them “inspections”? My bad. These are raids.

On June 13, 2023, the NY Appellate Court in Owner Operator’s Ass’n v. NY State Dept of Transportation spoke to the limits of a regulatory inspection. In that case, the court heard testimony from commercial truck drivers, who argued that their truck cabs were, in many instances, their homes, and should not be searched by the state department of transportation.

The court held that “searches conducted outside the judicial process, without prior approval … are per se unreasonable … subject only to a few specifically established and well-delineated exceptions … A regulatory scheme authorizing [a] search must delineate rules to guarantee the certainty and regularity of application necessary to provide a constitutionally adequate substitute for a warrant.”

The court held that the state could properly preserve the rights of commercial truck drivers when they scanned for data regarding hours and miles driven in such a manner that the inspectors did not even have to enter the cab or the cargo hold of the truck. In no instance could the searches be used as a pretextual search to gather evidence for a crime.

The amended cannabis law sets up every so-called inspection to be a pretextual search, since Section 496 states that “[n]o enforcement action taken under this section shall be construed to limit any other criminal or civil liability …” In other words, they can seize your stuff, drag you through the OCM hearing, hit you with a ginormous penalty, and still turn your case over for criminal charges.

And that means that they really do need a search warrant.

As I wrote in NY Cannabis Insider on Aug. 8, 2023, the War on Drugs is still raging. Even while asking firmly and loudly for a warrant, young women have been tackled, doubled over, their wrists cut, as they were slapped into cuffs – all under the guise of a regulatory inspection.

A client gave testimony under oath last week in an OCM hearing that he did not feel he could leave his shop while an inspection was ongoing. He explained that, as a Black man faced with numerous officers decked out in bulletproof vests and guns, he was in fear that a single misunderstood step or statement could prove fatal.

Another client had an employee go into a full-blown panic attack when the tax police arrived at their tiny shop. The employee, also a Black man, spent more than two hours with his arms raised, literally afraid for his life, and afraid that his family would join the ranks of thousands of other Black and brown people who have lost loved ones due to a stop that went wrong.

These are not regulatory inspections. These are not tax inspections. These are raids.

An OCM regulatory inspection to determine whether a shop was licensed or not could be carried out while a state employee sat at a desk (or on a cell phone, for that matter) pulling up the OCM site that shows all 23 of the licensed retail operators. Other licensed operators, such as cultivators, manufacturers, and distributors, are also listed on the OCM site. No need for raid jackets (their term, not mine) and guns.

So, too, could a New York State Department of Tax and Finance inspection be carried out while a civil service employee searched online state records to verify whether a business was in compliance with tax payments.

It is unfathomable to think that the tax police raided the hundreds of thousands of businesses and individuals that have been issued New York State tax warrants in the same manner that the unlicensed cannabis shop owners have been raided. Just imagine the SWAT teams descending on a liquor store, a beauty salon (remember they are subject to state inspections, too!), a pawn shop, or a butcher shop as they have on the unlicensed cannabis shops.

Don’t be silly. People learn that they have a tax warrant when they get a notice through the mail. In really awful cases, they hear about it from their bank. Neither the postman who delivers the letter nor the bank official who delivers the bad news of the tax lien carries a gun. Nor do they work alongside a team of 10-20 others, all of whom are in bulletproof vests.

And of course, if you’ve been around the sun a time or two, you are aware that restaurants periodically display the “BYOB” sign because of a snag on their liquor license. Did all of us miss Darth Vader and the Storm Troopers descending from DTF to raid those restaurants?

No! They don’t usually carry out inspections that way!

So I ask – how ‘bout that war on drugs? I’m here to tell you, it is still raging. The only thing that has changed is the target population.

While Judge Bryant is sorting through the CAURD regulations and leaning on parties to reach a settlement, the harms executed by the State of New York continue. How ironic that these egregious violations of constitutional rights are executed under the guise of paving the way for an industry launched by those who previously suffered through Stop and Frisk, racial profiling, and police brutality, and are now viewed as favorites by the state as regulated marijuana, frontrunning CAURD licensees?

Can the state simply stop inflicting harm in order to enforce its rules, period? Put another way, the State of New York must conduct regulatory inspections in a manner that is not violative of 4th Amendment rights.

On Friday, Aug. 11, 2023, in Wayne County, New York, David Tulley, through his attorney, Joseph A. Bondy, filed a Motion to Dismiss the Matter of New York State Office of Cannabis Management v David Tulley, et al, Index No. CVO89825.

Mr. Tulley had been subjected to eight warrantless and invasive raids on his places of business, one of which took place while he was in court on another matter. New York Gov. Kathy Hochul and Attorney General Leticia James used Tulley as a poster child, attempting to charge him, try him, and convict him in a press conference, long before giving his counsel time to respond, or before our commonly held notions such as innocence before proof of guilt could rightfully unfold.

In the Motion to Dismiss, “The Tulley Respondents respectfully request that this Court sua sponte issue an injunction enjoining OCM and the Department of Tax and Finance from conducting further warrantless searches upon purported unlicensed cannabis retailers, enjoin any and all administrative or judicial proceedings commenced and predicated upon the seizure of that evidence derived from those warrantless searches, and award actual costs, damages, and expenses to Respondents and similarly situated individuals, and for such other and further relief as this Court deems necessary, just, and proper.”

A hearing is set for Sept. 6, 2023, in Wayne County Supreme Court.

The next court date in the case of Carmine Fiore et al v. New York State Cannabis Control Board et al is Aug. 25, 2023, in Ulster County. The Fiore case may merge with another lawsuit, The Coalition for Access to Safe and Regulated Cannabis v. New York State Cannabis Control Board et al, since they have the same judge, and they are both asking that New York would require the CCB and OCM to open “the initial adult-use retail dispensary license application period … for all applicants at the same time,” pursuant to the MRTA.

Conceivably, we could have a time when the State of New York is enjoined from opening newly licensed businesses at the same time it is enjoined from enforcing against unlicensed businesses.

It’s just as well. It’s difficult to see how they could possibly enforce against approximately 36,000 unlicensed businesses. If you need a reminder of how I arrived at that figure, take the 2300 city blocks of Manhattan for a starting figure, add 70% of that number times four for the four other boroughs, plus representation from the state’s 62 cities, 932 towns, and 553 villages. That’s just the retail shops that identify as “smoke shops” on a Yelp search. Triple that number to account for the shops that are “convenience stores” or “exotics,” not to mention art galleries, bodegas, bookstores, and other storefronts. And unlicensed cannabis businesses include cultivators, processors, chefs, and event operators.

Triple that 36,000 figure to get close to imagining how many New Yorkers will be out of work if and when the state successfully shutters all of them. If math isn’t your thing, I am suggesting that approximately 108,000 people are currently employed in the unlicensed cannabis industry in New York State. And if the unlicensed cannabis businesses close, 108,000 New Yorkers will be unemployed.

We would be much better served by offering a compromise that includes a transitional license that would help the beleaguered farmers, as well as the state’s tax coffers. Coincidentally Judge Bryant, just last week, urged the parties to seek to resolve the impasse in the Fiore matter by talking and finding common ground.

One more thing. The injunction in the Fiore case has heightened anxieties amongst the provisionally licensed CAURD recipients about delays in opening their shops. But the state was already moving at a pre-global-warming-glacial pace, rolling out fewer than three shops per month. We were already looking at a 15-year timeline to get everybody who was preliminarily licensed open for business.

Don’t blame the disabled vets. Don’t blame the MSOs. Don’t blame the unlicensed shop owners. The slow rollout is entirely on OCM and the CCB. They are the ones who have sole control over who gets to open for business and when.

It’s been a long road since March 31, 2021, when the MRTA was signed into law.

Aug. 15, 2023, was 867 days.

See you in court.