Gov. Kathy Hochul tweaked state law earlier this year to increase the potential fines for unlicensed cannabis sales and bolster enforcement against shops that flout the law. But efforts to shut down these stores have been slow to yield results and are still being “fine-tuned,” state cannabis officials admitted Monday at a hearing on the adult-use market in Albany .
State senators grilled officials on what they would do to improve the process.
“As much as this undermines the legal market, this is also a public health issue, particularly for young people,” said State Sen. Brad Hoylman-Sigal, who represents the west side of Manhattan.
He pointed to examples of smoke shops in New York City that were observed selling marijuana to high school students as well as shops that had been targeted in armed robberies.
State cannabis regulators temporarily paused the administrative law hearings in which an appointed judge can issue fines or other penalties for shops that violate the law, the news outlet The City reported last week. That’s because the state was struggling to get judges to issue the maximum fines available of $20,000 per day, Chris Alexander, executive director of the state Office of Cannabis Management, explained at Monday’s hearing.
Enforcement agents with the Office of Cannabis Management typically issue a violation after the first inspection in which they find illicit cannabis products and then pursue a hearing if there’s still evidence of foul play after a second inspection several weeks later, said Dan Haughney, the agency’s director of enforcement.
But Alexander said the judges — which are appointed as part of the state’s administrative law procedure that’s separate from the traditional court system — have so far been reluctant to infer that the vendors brought to trial had engaged in continuous sales throughout that time.
Alexander testified state regulators are pursuing changes to the process to “get the largest fines possible for the illicit operators,” though he said the current penalties may not be a sufficient deterrent.
“Even at the $20,000-a-day limit, for some of these folks who are owning multiple operations across the city or across the state it is still a cost of doing business at times,” Alexander said.
He added that the hearings would resume “shortly” but did not give an exact date.
Gothamist previously found that several shops issued notices of violations by the state reopened soon after they were first inspected.
Haughney noted that the state can sometimes seek to get a particularly “egregious” shop padlocked shut, but he said that requires the cooperation of the state attorney general’s office. “It is a long-term process,” he said. “It’s not a quick fix.”
Even with administrative hearings paused, enforcement agents continue to investigate and raid shops, Alexander said. So far, the Office of Cannabis Management has conducted more than 300 inspections and seized nearly 10,000 pounds of illicit cannabis worth an estimated $50 million.
The governor’s office said earlier this month that the state had shut down six shops through the joint enforcement efforts between the Office of Cannabis Management and Department of Taxation and Finance. Hochul’s office did not respond to a request Monday for an update on that figure or locations of the shops that had been closed.
Asked for comment on the suspension of administrative hearings for unlicensed shops, governor spokesperson Jason Gough said, “Hochul has repeatedly stressed the importance of cracking down on illicit cannabis shops that sell unregulated products and undermine New York’s nation-leading equitable cannabis industry. She passed landmark legislation this year to empower the Office of Cannabis Management and the Department of Tax and Finance to hold illicit sellers accountable, and has directed all state agencies to fully participate in this effort.”
State Sen. Sean Ryan asked if it was too late to “put the genie back in the bottle” and get rid of the illegal cannabis shops that have sprung up since marijuana was legalized in New York in 2021. Alexander responded that the state Office of Cannabis Management would not be able to do it “without greater collaboration and coordination” among state agencies, local law enforcement officials, landlords and others.
Patrick McKeage, first deputy director for the Office of Cannabis Management, urged patience in his testimony. He said it took years after Washington state legalized marijuana in 2014 for the bulk of sales to come from the legal market.
“It takes time,” McKeage said. “It’s not a switch you can flip overnight.”
Despite issuing hundreds of adult-use dispensary licenses so far, fewer than 30 have opened statewide since the first shop came online in late 2022. The state is currently in the process of issuing more licenses.