Why it matters: The governor of New York, Kathy Hochul, has proposed new legislation to tackle cannabis operators that are operating outside of the law. The bill has the backing of dozens of lawmakers in the Senate and State Assembly and provides increased authority for regulators to enforce regulations and close any shops involved in the sale of illegal cannabis.
What they are saying: Governor Hochul believes that New York’s regulatory structure for cannabis products needs improving, and there are still illegal dispensaries that need to be “closed”. Elliot Choi, the Chief Knowledge Officer at cannabis law firm Vicente LLP, is supportive of the use of financial penalties over jail time for those who break the law, so as to avoid anything similar to the “prior failed war on drugs.”
The big picture: Since the legalization of recreational cannabis in 2021, the number of illegal cannabis shops in New York State has risen sharply, leading to concern from legitimate operators and the need for the state to take action against unlicensed operators. The proposed legislation would help the Office of Cannabis Management, the Department of Taxation and Finance, and local law enforcement crack down on these illegal dispensaries and impose penalties on any retailer that attempts to sidestep state cannabis taxes.
What to watch: The proposed legislation is still in its early stages, but it is known that the bill would result in fines of up to $200,000 for illicit cannabis plants or products and businesses would face fines of up to $10,000 per day for engaging in cannabis sales without a license from the state. Choi from Vicente LLP has called for resources to enforce the regulations and for landlords to be punished for renting to illegal operators.
My take: States that have legalized cannabis must ensure that there is a “level playing field” between legal and illegal operators. Many illegal operations have huge advantages over their legal counterparts, including not having to pay state taxes, so it is right that New York moves to close down these illegal operators. However, as Choi suggests, resources must be given to those enforcing regulations and punishing landlords and property owners who enable illegal cannabis activity.
