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New York City Sheriff Anthony Miranda on Monday told the NY State Senate Subcommittee on Cannabis that unlicensed cannabis retailers are running rampant in the city, with likely thousands of businesses operating there today.
When New York legalized cannabis, one of the goals was to bring legacy operators into the legal market, but these are not the people operating unlicensed stores popping up in New York City, Miranda said.
“These illegal retailers must be held accountable,” Miranda said. “There is a difference between the recent proliferation of visible unlicensed stores and the previously existing unlicensed legacy market that the MRTA was aimed at protecting and transitioning to licensed businesses.”
Cannabis advocates across New York State have, at times, disagreed with how the state should go about enforcing regulations against unlicensed weed shops that sell marijuana illegally, but none can ignore the proliferation of these stores since the MRTA passed into law in 2021.
Miranda spoke to legislators during a marathon fact-finding hearing that Sen. Jeremy Cooney called to address the state’s troubled rollout of its legal cannabis industry.
Monday’s bipartisan hearing included Senators Cooney, Liz Krueger, Michelle Hinchey, James Skoufis, George Borrello, Pamela Helming, Nathalia Fernandez, and five others. It comes amid cascading problems in the Empire State’s legal cannabis industry – which have left hundreds of farmers with two harvests’ worth of cannabis but few retail outlets to which they can sell their products, and hundreds of retail licensees unable to open their doors due to a court injunction stemming from a predictable lawsuit.
And those few who’ve been able to sneak past the injunction and open often find themselves surrounded by unlicensed shops selling products at a lower price.
Amid New York’s slow marijuana retail rollout, unlicensed shops have multiplied across the state. Soon after the MRTA passed, some worried that grey market shops could undermine the legal market. On Monday, Miranda said many consumers at illegal shops assume the stores are licensed.
“The lack of licensing, oversight and control not only creates health and safety concerns, but it … undermines the legal industry,” Miranda said.
Licensed cannabis operators have long complained that unlicensed operators – who don’t pay cannabis business taxes or follow the strict regulations governing licensed businesses – create an uneven playing field. In early 2023, police in New York City began cracking down on the stores.
New York’s Office of Cannabis Management began holding enforcement hearings after early June, when the OCM and the Department of Taxation and Finance conducted a first sweep of New York’s unlicensed market.
Earlier this month, the Cannabis Control Board expanded OCM’s enforcement powers, making it easier for them to impose fines up to $20,000 per day on businesses that sell marijuana without a license.
On Monday, Amanda Hiller, acting commissioner and general counsel of the state Department of Taxation and Finance, said New York has collected a total of $8.6 million in legal cannabis retail taxes, and $4.3 million in distribution taxes. She estimated that the amount of uncollected taxes from illegal smoke shops is probably in the millions.
Initially, DTF had no enforcement authority, but the agency now works closely with OCM investigating unlicensed shops.
“We go out with OCM investigators together when we’re doing retail inspections,” Hiller said. “We plan those operations together … we are in the store together.”
However, the OCM has quietly suspended enforcement hearings, as recently reported in The City.
Gale Brewer, a New York City Councilmember in Manhattan, has long urged action against unlicensed cannabis retailers in the city: she has said the stores sell to teenagers, have become armed robbery targets and undermine the emerging legal market.
At an NYC Council hearing in January, Brewer said products from these stores often contain dangerous contaminants, and the illegal shops openly operating with no consequences threaten the survival of legal operators, who have to pay hefty taxes and compliance fees.
During Monday’s hearing, Brewer told lawmakers that unlicensed retailers continue to proliferate, and stores raided by the OCM often reopen later. Brewer said New York City Mayor Eric Adams should reestablish an interagency task force focused on shutting down unlicensed weed shops. She said members of the New York Police Department have said they cannot shut down stores because this authority is placed within the OCM.
While Brewer said she doesn’t want a return to the War on Drugs’ aggressive style policing of cannabis, these operators are in possession of more than five ounces, and selling to minors – both felonies.
“We have to acknowledge there is no way out of this problem without the involvement of the police department,” Brewer said.
Dasheeda Dawson, founder and director of Cannabis NYC, said cannabis enforcement was disastrous to communities in New York for decades, but added that unlicensed stores present a danger to public health.
Dawson, who has previously praised New York weed regulators’ efforts toward creating an equity-focused cannabis market, hailed the state’s equity efforts including its retail launch via the Conditional Adult-Use Retail Dispensary program, which requires licensees to have been negatively affected by a marijuana-related conviction.
However, Dawson said, the illegal stores are causing some legacy operators to reconsider entering the legal market, and are upsetting community members.
“If you’re the person who’s been operating in the legacy market, there’s this question of ‘what’s the incentive if these stores can operate without any punitive action?’” Dawson said.
“Most of the people who are upset are community members … these stores aren’t being run by community members. It’s not ‘for us, by us.’”