The City by Rosalind Adams
The state of New York has fined unlicensed smokeshops for selling cannabis since last year more than $25,000,000 in fines. However, only a tiny percentage of these fines has been collected, according to THE CITY.
Last year, the two agencies received greater authority to enforce 2021’s cannabis law. They began conducting joint raids on smoke shops that sold cannabis products without a licence last summer. The two agencies collect and levy fines separately. When it is difficult to find the owner of a smoke shop, fines can be levied on the individuals operating the business or the company itself.
The Office of Cannabis Management has said that it has collected $22,500 from unlicensed stores. Sources familiar with the state enforcement progress claim that the Department of Taxation and Finance (DTF) has collected zero fines.
The City reported in October last year that, due to a lack resources, the state cannabis agency had suspended the enforcement hearings following raids by the agency on unlicensed stores. The City reported at the time, that lawyers for unlicensed stores had received notifications on behalf of clients that cases would be withdrawn. The raids continue.
According to notices obtained from THE CITY, while OCM retracted many cases, certain shops and their owners have received separate letters warning them separately of fines exceeding $150,000.
A cannabis shop without a license was fined $162,000 by the state’s tax department. The City of Toronto has issued a tax fine to a cannabis shop that is not licensed for over $162,000.
Aaron Ghitelman is a spokesperson from OCM. He said that the State prioritizes shutting down illegal stores and seizing illegal products. While we acknowledge that entities facing fines have the right to due procedure, we are dedicated to working within the boundaries of the law in order to collect fines after the legal process has been completed.
For example, fines imposed by the tax department can be appealed. The Office of Cannabis Management fines can be challenged at administrative hearings that were halted in October. This extended the timeline for the state to collect fines.
Ghitelman said that as part of the state’s enforcement measures, the state had seized illicit products worth tens and tens millions of dollars. Gov. Kathy Hochul, a Democrat, has made a point of highlighting the quantity of products seized repeatedly in her press releases on the raids.
The Governor’s Office and the State Tax Department declined to respond to questions, and referred to the OCM statement.
The lack of fines collected to date highlights the difficulty of enforcing cannabis laws in a state where the gray market is booming.
Unlicensed shops can be found in many neighborhoods of New York City. Although there is no official number, it is believed to be thousands. CNY Central , a local news outlet, reported last month that OCM only has 14 investigators.
Not only the two state agencies are involved in enforcement. New York City’s Sheriff’s Department also inspects smoke shops, while the NYPD conducted undercover checks of shops suspected to be selling cannabis products to minors.
Hochul, in her annual state-of-the-state address delivered last month, said she would be seeking new enforcement powers as part of this year’s budget.
We know that there is more work to be done, and we will need more tools. She said that she would continue to work with local leaders to close down illegal cannabis shops, including those in New York City.
Sen. Jeremy Cooney, the chair of Senate Cannabis Committee (D), agreed that more enforcement power is needed but added that it must be done in conjunction with the opening of new stores.
Cooney, in an interview with THE CITY, said that the way to go forward was to ensure there were more legal stores on our streets. It’s a parallel approach–one to close stores and ensure enforcement, the other to open new ones.
Cooney continued, “We are not moving fast enough.”
In a Senate hearing held in late October , Chris Alexander stated he didn’t think that fines would be enough to discourage unlicensed stores. He said in response to questions that he expects OCM’s administrative proceedings to resume within a few weeks. The hearings were not resumed for months. OCM says it wants to expand its enforcement powers over padlock shops instead of fining them.
Sen. Cooney informed THE CITY that he had no idea about this and found it to be “very worrying.”
Deficit notices stated that the Tax Department fines are calculated using a formula which determines that shops without a license owe as much as two times the tax due on the illicit cannabis.
The letters that THE CITY reviewed state that more than 12 lbs of illegal cannabis were seized, but they do not provide any details about the calculations. People have the right to appeal fines under the law, which could be one of the reasons why THE CITY hasn’t collected fines yet from unlicensed stores.
In both cases, however, the OCM had raided the shops and the Tax Department had confiscated the product. However the state cannabis agency retracted their actions.
“Of Course no one pays them,” said Paula Collins. She represents clients who run unlicensed smokeshops. “They thought that it was over.”
This article was originally published by THE CITY – a nonprofit newsroom serving the people of New York. Subscribe to our SCOOP Newsletter to receive exclusive stories, useful tips, a list of low-cost events and all the information you need to be a well informed New Yorker.
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The article New York State has collected almost none of its $25 million in fines against illegal marijuana stores first appeared on Marijuana Moment.
