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US (NY): Governor Hochul announces start of state interagency enforcement actions against unlicensed cannabis businesses

Governor Kathy Hochul today announced the launch of an interagency initiative to cease the sale of untested cannabis from unlicensed storefronts and trucks. Enforcement officers from the New York State Office of Cannabis Management and Department of Taxation and Finance conducted inspections at storefront businesses not licensed to sell cannabis and issued Notices of Violation and Orders to Cease Unlicensed Activity, when appropriate. These actions will be replicated across the state to end public sales of untested cannabis by unlicensed businesses. As part of the FY 2024 Budget, Governor Hochul signed critical legislation allowing for these expanded enforcement actions against unlicensed cannabis businesses to take place.

“New York is proud to have undertaken the most equitable legal cannabis roll-out in the nation and the State will not stand idle as unlicensed operators break the law and sell untested products to underage New Yorkers,” Governor Hochul said. “These enforcement actions are critical steps to protect and help those individuals who were promised a shot to start a legal business and be successful. Additionally, these unlicensed operators undermine the State’s efforts to generate substantial funds for a social equity fund that will go into the communities that have been hardest hit by over-prosecution of the cannabis laws in the past.”

Governor Hochul signed legislation allowing for enhanced enforcement of unlicensed cannabis businesses as part of the FY 2024 Budget. The legislation allows the Office of Cannabis Management to assess civil penalties against unlicensed cannabis businesses that would undercut their efforts, with fines of up to $20,000 a day for the most egregious conduct. It also makes it a crime to sell cannabis and cannabis products without a license.

As a result of the legislation, the Department of Taxation and Finance can also conduct regulatory inspections of businesses selling cannabis to determine if appropriate taxes have been paid and levy civil penalties in cases where appropriate taxes have not been paid. The legislation also establishes a new tax fraud crime for businesses that willfully fail to collect or remit required cannabis taxes, or knowingly possess for sale any cannabis on which tax was required to be paid but was not.

By taking decisive action against unlicensed dispensaries, New York State is taking a significant stride towards eradicating unlawful cannabis operations that jeopardize public safety, consumer well-being, and the integrity of New York State's legal cannabis market. This hybrid approach aims to foster a fair and regulated market environment, ensuring consumer protection and bolstering support for licensed cannabis businesses.

New York State Cannabis Control Board Chairwoman Tremaine Wright said, “The successful enforcement actions against unlicensed storefronts and trucks selling cannabis in New York City serves as a clear message that New York State is actively taking action against illicit operators. By enforcing the law, empowered by new legislation, we are safeguarding public safety and the integrity of the legal cannabis market. Our mission is to create a fair and regulated environment that supports licensed businesses and protects consumers.”

New York State Office of Cannabis Management Executive Director Chris Alexander said, “Through the collaboration of our enforcement teams and law enforcement agencies, we will be able to take meaningful action against illegal cannabis operations that pose countless risks to our communities. This targeted operation is a significant step towards promoting a safe, transparent cannabis industry in New York State. With the strengthened penalties and unified enforcement measures in place, we are actively working towards our goal of a regulated market that fosters consumer trust and supports licensed operators.”


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