Why it matters: New York Governor Kathy Hochul has signed new legislation aimed at reducing the illicit cannabis market, providing the New York Office of Cannabis Management (OCM) with additional enforcement powers and enabling the state Department of Taxation and Finance (DTF) to enforce regulatory requirements. The new legislation seeks to prop up the emerging industry for recreational marijuana, which was legalized by state lawmakers in 2021.
What they are saying: Hochul said in a statement on May 3 that “unlicensed dispensaries violate our laws, put public health at risk, and undermine the legal cannabis market”. The new legislation will enable the OCM to assess civil penalties against unlicensed cannabis businesses, with the “most egregious” operators being subject to fines of up to $20,000 per day.
The big picture: New York’s regulated sales of adult-use cannabis began in late 2022; however, only a handful of licensed dispensaries have opened statewide. Meanwhile, free from the threat of criminal penalties, unlicensed dispensaries have proliferated, with a law enforcement task force study identifying at least 1,200 illicit pot shops in New York City earlier this year.
What to watch: The new legislation also empowers the DTF to conduct regulatory inspections of businesses selling cannabis and cannabis products to determine if the appropriate taxes have been paid; it will be interesting to see whether the introduction monetary penalties for non-payment will help to drive illicit operators out of the market and allow licensed retailers to benefit.
Give your take: As legalization spreads across the US, the regulation of cannabis oil must be kept almost regulatory to ensure that the benefits are maximized whilst the risk to public safety and the illicit market are minimized. The new legislation is a positive step in this direction and should help licensed operators thrive.
